Global chip market still headed for 20% decline in 2023, says Penn
Analyst Malcolm Penn has moderated his outlook for 2023’s global chip market slightly, softening his view of the most likely contraction to 20 percent. He previously predicted a 22 percent fall.
However, Penn remains the most bearish of forecasters and a long way below most others. Gartner recently forecast that 2023 would see the market fall by 11.1 percent (see Global chip market to decline 11 percent in 2023, says Gartner).
In a conference call Penn, the CEO and founder of Future Horizons, said that would be impossible without immediate sequential growth in the 2Q23 and “normal” growth throughout the rest of the year. “You would need growth in Q2 and even stronger growth in Q3. There is just no sign of that happening,” Penn said.
“The good news is that unit shipments are below the long-term trend line. That means inventory is being burnt off. The March shipments run rate was 6.2 billion units per week compared with an earlier peak of 8.2 billion units per week. If anything, capacity has increased, so fabs were only producing 75 percent of their capacity or less,” said Penn.
Two more quarters to run
This provides another reason why the chip sector cannot suddenly start showing quarterly sequential and annual growth. “The inventory depletion has two more quarters to run so I see no upturn until the 4Q23. Right now all the growth rate trends are still negative,” Penn said.
Back in May 2022 Penn had plotted bull, mean and bearish forecasts for 2023 chip market growth at -17, -22 and -26 percent respectively (see Chip market growth in 2023 will be ‘deeply negative’ says analyst). Penn re-iterated this forecast in January 2023.
“Q1 [of 2023] was closer to our bull scenario. The -26 percent worst-case bear scenario is now not likely to happen. But nothing of substance has changed,” he said.
Penn is now forecasting that the 2023 global chip market will contract by between 18 and 22 percent with a 20 percent decline as the most likely outcome.
With regard to 2024 Penn said it was too early to tell exactly where in the upturn cycle the year would land and that therefore plotting growth numbers was premature.
Chip market growth by quarter in 2023 with bull, bear and most likely versions. Source: Future Horizons.
Related links and articles:
News articles:
Global chip market to decline 11 percent in 2023, says Gartner
Some market forecasters are in denial, says Future Horizons’ Penn
Chip market growth in 2023 will be ‘deeply negative’ says analyst
If you enjoyed this article, you will like the following ones: don't miss them by subscribing to :
