Market research firm Gartner has reduced its forecast for the value of the global chip market in 2023 but remains an optimistic forecaster; predicting a 3.6 annual percent decline. Earlier this year Gartner was saying the market would fall by just 2.5 percent in 2023.
However, these figures are higher than the 6 percent 2023 decline forecast by Semiconductor Intelligence in October and much more bullish than the 22 percent decline that Malcolm Penn of Future Horizons has predicted (see Chip market growth in 2023 will be ‘deeply negative’ says analyst).
In its latest figures Gartner has said the global chip market in 2022 will be worth US$618 billion and eke out a 4 percent annual increase. In 2023 the annual market will dip to US$596 billion returning it to the value of 2021.
“The short-term outlook for semiconductor revenue has worsened,” said Richard Gordon, vice president at Gartner, in a statement. “Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”
Gordon’s analysis is that the chip market is split between weak consumer-driven markets, such as smartphones and computers, and relatively resilient enterprise-driven markets that include enterprise computing, industrial, medical and transportation.
The consumer markets are being hit by declining disposable income caused by rising interest rates and inflation.
“The relative strength in the enterprise-driven markets comes from strategic investments by corporations that are looking to strengthen their infrastructure to continue supporting their work from home workforce, business expansion plans and ongoing digitalization strategies,” said Gordon.
Memory getting cheap
Memory revenue is leading the decline, with lower demand and swollen inventories leading to considerably lower prices. As a result, the memory market will remain flat in 2022 and is forecast to decline 16.2 percent in revenue in 2023, Gartner said.
DRAM is likely to be in oversupply for the first three quarters of 2023, Gartner said. DRAM revenue is set to decrease 2.6 percent to reach US$90.5 billion in 2022 and will further decline 18 percent in 2023, to total US$74.2 billion.
A NAND flash memory fab outage that occurred in 1Q22 increased prices and masked the deteriorating demand environment, resulting in excess inventory in 3Q22. This is expected to carry into 1H23. NAND revenue is projected to increase 4.4 percent to US$68.8 billion in 2022, but decline 13.7 percent in 2023 to $59.4 billion.