Global fab utilization to drop below 70% in 4Q23, says SEMI

Market news | November 14, 2023

By Peter Clarke

The global chip market will return to year-on-year growth in 4Q23 but with increased sales coming from inventory, fab utilization is forecast to fall to 67 percent, according to industry organization SEMI.

Electronic equipment sales are predicted to achieve a 22 percent quarter-over-quarter increase in 4Q23, adding to 7 percent growth posted in 3Q23. Meanwhile IC sales are expected to rise 4 percent sequentially after improving 7 percent 3Q23 as end demand improves and inventory levels normalize.

Quarterly IC sales (US$bn). Source; SEMI.

The figures come from the Semiconductor Manufacturing Monitor report prepared by SEMI in partnership with an external market research organization, TechInsights.

Total IC inventory (US$bn) versus IC manufacturing capacity utilization (%). Source: SEMI.

Despite the improving situation the chip manufacturing indicators remain soft with fab utilization down expected to drop to 67 percent in 4Q23 this is partly because increased sales are coming from the burning off of inventory. Capital expenditures are therefore expected to decline in 2H23. Non-memory capex is expected to outperform memory capex – a sector where vendors have been slowing production to support increased average selling prices. However, total capital expenditures in 4Q23 are at about the same level as 4Q20.

The capital expenditure slowdown has hit front-end equipment sales. Back-end equipment billings are projected to increase in 4Q23.

“While semiconductor markets have seen year-over-year declines the last five quarters, year-over-year growth is expected to return in the fourth quarter of 2023 as production cuts have worked their way through the supply chain,” said Boris Metodiev, director of market analysis at TechInsights, in a statement issued by SEMI.