Malcolm Penn, CEO and principal analyst at market research firm Future Horizons, has halved the size of the contraction he sees for the chip market in 2023.
In May 2022 Penn said the chip market would contract by between 17 and 26 percent. In May 2023 he trimmed that forecast to between 18 and 22 percent with 20 percent as the most likely outcome.
In his latest chip market briefing Penn predicted the market would come at between 8.5 and 11.5 percent shrink or minus 10 percent at the mid-point. This puts Penn in-line with other forecasters such as Gartner (-11 percent) and WSTS (-10.3 percent).
Penn put his change of mind down to much stronger-than-expected sequential market growth in 2Q23. Whereas he had been expecting a 5 percent sequential contraction WSTS/SIA statistics showed 6 percent growth.
“The market has bottomed out and it came a quarter earlier than usual,” Penn said. He said down cycles usually last four quarters but the latest one had ended after three. “It was driven by logic and micro sales. That is AI and so on,” he said.
“The timing has impacted the math but not the analysis. A change at the beginning of the year has an amplified effect for the full year. However, the strength of the recovery is till unclear,” Penn said.
Penn added that he was not concerned that he had changed his forecast in such a major way. “We do not hold ourselves hostage to a number. More important is the analysis, which has been absolutely spot-on. We were the only analyst that back in 2022 that said 2023 would be a negative year. I am happy about the analysis.”