The global chip market is headed into a decline that looks set to start earlier and be deeper than market forecasters have so far predicted.
The annual growth of the global chip market was 0.1 percent in August down from 7.3 percent in July, according to the Semiconductor Industry Association, reporting figures compiled by the World Semiconductor Trade Statistics organization.
These figures are based on the three-month moving averages. This is done to smooth out anomalies in individual months but also serves to emphasize the rapid onset of the market softening and likelihood of a deep decline.
The slowdown has produced a quarter-on-quarter sequential decline of 8.3 percent. Normal seasonality would show strong sequential market growth as companies buy in chips for consumer electronics launches in the autumn ready for the November-December buying season.
Malcolm Penn, chief analyst with Future Horizons recently gave his own forecast with a 3Q22/2Q22 decline of between 1.0 and 6.2 percent. He foresees a 22 percent year-on-year market decline in 2023 (see Chip market growth in 2023 will be ‘deeply negative’ says analyst). With a quarter-on-quarter decline of 8.3 percent arriving in August the situation appears to already be worse than Penn’s “bear” forecast.
Three-month average of chip sales by geographic region for August and July 2022. Source: SIA/WSTS.
The Chinese and Asia-Pacific regions, with their close coupling to consumer electronics, are driving the market down initial. China’s chip market is now 10 percent smaller than it was a year ago. Asia-Pacific also tipped into annual contraction in August. The America’s and Japan regions are still showing growth but it is rapidly diminishing following where Asia leads.
Americas region chip market growth was phenomenally strong at 40 percent annual growth and has fallen to 11.5 percent. Japan’s market has fallen from 16.1 percent annual growth in June to 7.8 percent in August.
This leaves the almost unprecendented situation of the European region leading growth with 14.9 percent.
“Global semiconductor sales growth has stalled in recent months, and month-to-month sales decreased in August by the largest percentage since February 2019,” said John Neuffer, CEO of the SIA, in a statement.
Monthly data is given by the SIA as a three-month average although the source of the data, World Semiconductor Trade Statistics, tracks monthly data. The SIA and other regional semiconductor industry bodies opt to use averaged data because it evens out the actual data that typically shows troughs at the beginnings of quarters and peaks at the ends of quarters.
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