Over capacity, high inflation and industry recession will drive the semiconductor market into reverse in 2023 says a leading analyst.
Malcom Penn of market analyst Future Horizons is reducing his prediction for growth in 2022 from 10% to 6% and -23% in 2023 as new capacity becomes available to address the current shortages of chips.
“The industry’s 17th downcycle fuse is already burning because of a collapsing chip market combined with a global economic downturn,” he said. Big buyers of chips such as Bosch are already preparing for a slowdown.
Penn repeats a call made in January before higher inflation figures were a factor.
“It will be severe,” he said. “Now inflation is a big, big problem, the genie is out of the bottle. The only way to fight inflation is to put up interest rates but the problem is that this won’t solve the global supply chain problems. If this period of inflation continues it is pretty certain it will trigger a global recession and that wasn’t on the agenda back in January this year. That will start to kick in in the second part of the year just as the new capacity cuts in and that’s a double whammy.”
The semiconductor industry saw growth of 26% in 2021 to $555bn, up from $440bn in 2020.
The downturn will reduce the capital expenditure in 2023 and onwards and reduce the pressure on semiconductor equipment makers, which saw sales grow 44% last year to a record $102bn says industry group Semi.
“The natural slowdown in equipment is probably a good thing, as that could make the capacity situation worse,” he said. “The capex figures are from Semi and I think is real equipment that is being shipped, but the 2022 capex figure is inflated and probably won’t be met.”
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