The global semiconductor market will shrink by 4.1% in 2023 due to a sharp drop in memory chip sales

On November 29th, the World Semiconductor Trade Statistics Organization (WSTS), composed of major semiconductor manufacturers, released a report stating that the semiconductor market size in 2023 will decrease by 4.1% year-on-year to US$556.5 billion, which was previously expected to grow by 4.6%. For the first time in four years, the market experienced negative growth expectations.

In the spring of this year, WSTS had predicted that the market growth rate in 2023 would be 5.1%, but it was revised down to 4.6% in August.

WSTS is a global semiconductor supply and demand trend research organization with about 40 major semiconductor company members, including Samsung Electronics, SK Hynix, Micron, Sony and TSMC.

In terms of categories, the largest decline in 2023 is memory chips, which account for more than 20% of the market size, which is expected to decrease by 17% compared with 2022, dragging down the overall growth of the semiconductor market. Growth forecasts will be revised down as inflation rises and end-market demand weakens, especially for personal computers (PCs) and mobile phones, which are affected by consumer spending.

In the second half of 2022, the memory chip market will continue to struggle. SK Hynix predicts that PC shipments will drop by about 15% in 2022, and may be further revised in 2023; the mobile phone market is expected to shrink by about 7%-9%; the server market demand is relatively stable, but the investment of related companies has decreased And the destocking behavior of downstream customers will affect demand in the second half of the year.

In the third quarter, major memory chip manufacturers, including SK Hynix, Micron Technology, and Kioxia, successively announced reductions in capital expenditure or chip production. Among them, SK Hynix said it would cut its capital expenditure plan for next year by half. The overall production cut was 20%, and Kioxia also announced a 30% reduction in NAND flash memory chip production.

Outside of memory chips, semiconductor microelectronics devices are expected to experience negative growth for two consecutive years, with sales falling 1.8% and 4.5% this year and next year, respectively. Sales of logic chips, such as display driver chips (DDI) used in smartphones and TVs, are expected to fall 1.2 percent next year after recording a 14.5 percent rise this year.

Analog chips are expected to grow 1.6 percent next year after growing 20.8 percent this year. Analog chips are mainly used to process analog signals such as sound and light, and are used in communication, automobile, industry and other fields.

In addition to the above-mentioned integrated circuit products, other types of semiconductor products such as discrete devices, sensors, and optoelectronic chips will maintain a slight growth momentum next year, with growth rates of 2.8%, 3.7% and 3.7% respectively.

From a regional perspective, WSTS predicts that the Asia-Pacific region centered on China, as the world's largest semiconductor market, will experience a negative growth of 7.5%. Japan, the United States and Europe will maintain positive growth, but the growth rate will be almost flat, of which the United States will grow by 0.8%, and Europe will grow by 0.8%. 0.4%, and Japan increased by 0.4%.

In this regard, "Nihon Keizai Shimbun" believes that various semiconductor companies will curb supply through measures such as production reduction, but macroeconomic uncertainty is increasing. The decline in the semiconductor market in 2023 may be more pronounced than the last chip depression in 2019, which fell into negative growth.