When it comes to global semiconductor shipments, we finally see a decline after 32 consecutive months of growth.

When it comes to global semiconductor shipments, we finally see a decline after 32 consecutive months of growth.

The market for semiconductors has obviously come to a grinding halt. For the first time in 32 months, global shipments in July were lower than they were in the same month a year earlier. This information was revealed by the World Semiconductor Trade Statistics Organization (WSTS), which is comprised of many of the world’s largest manufacturers of semiconductors. In addition to other factors, including the slowdown of the Chinese economy, which is the primary market for smartphones, the special needs at home have been satisfied, which has resulted in a decrease in demand for semiconductors. After the second half of 2018, the semiconductor industry’s economic cycle has entered a downward trend for the first time in a while.

July saw a 1.8% year-over-year decline in semiconductor shipments, which totaled $44.4 billion. Since November of 2019, this is the first month in which it has been lower than the same month the previous year. Taking a look at the growth rate over the most recent three months, we can see that it dropped significantly from 18% in May to 6% in June.

“The extent of destocking (semiconductor products) has grown, which is further weakening the market,” At the beginning of August, Micron Technology in the United States revised downward its performance forecast for the months of June through August. When the growth of the market turned negative in July, the conditions of the business world deteriorated more quickly than was anticipated at the beginning of the period.

During the previous boom, there were supply factors as well as demand factors. At the demand level, in the industries that are associated with the high-speed communication standard ” 5G,” the demand from smartphones and communication infrastructure has increased, and at the same time, the demand for staying at home under the new crown epidemic has been superimposed. At the supply level, the shutdown of factories as a result of fires, natural disasters, or epidemics creates a seller’s market for semiconductors.

On the other hand, the stay-at-home demand came to an end, which coincided with rising global inflationary pressures and the lockdown in Shanghai in the spring, both of which took their toll. According to forecasts provided by a research company based in the United States called IDC, the quantity of smartphones shipped out of China will decrease by 15% on an annual basis between the months of April and June 2022.

A significant shift has also taken place in the business environment, which is now dominated by sellers. Prices are coming under increasing pressure as a result of rising inventories, which are particularly prevalent in the memory industry. The research company TrendForce, based in Taiwan, forecasts that the price of “DRAM” memory, which is used for the temporary storage of data, will decrease by 10-15% from April to June, while the price of “NAND flash memory,” which is used for the long-term storage of data, will decrease by 30-30%. 35%.

There is also a movement among semiconductor companies to revise their strategies regarding the purchase of new machinery. In the event that investment levels drop, headwinds, such as the preeminent semiconductor equipment companies in Japan, will also pick up speed. One participant in the stock market was quoted as saying that “the macro environment is worse than it was in 2018, and the recovery in demand for manufacturing equipment may be delayed” (Japan Domestic Securities).

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