Oversupply becomes inevitable with the worsening world economic situation
O Gartner, a world leader in research and advice for companies, announces new research that shows that the global revenue of the semiconductor market is expected to fall by 3.6% in 2023. The trend goes against what was expected for this year. According to Gartner research, global semiconductor revenue is forecast to total US$ 596 billion in 2023, down from the previous forecast of US$ 623 billion.
“The near-term outlook for semiconductor revenue has worsened,” he says. Richard Gordon, Vice President of Gartner. “The rapid deterioration of the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”
Currently, the semiconductor market is polarized between consumer and enterprise markets. The drop in consumer-oriented sectors results from the decline in customers' disposable income, caused by rising inflation and interest rates, as well as the redirection of spending to other areas such as travel, leisure and entertainment, negatively and indirectly impacting technology purchases.
On the other hand, enterprise-facing markets such as corporate networks, corporate computing, industrial transport, healthcare and commercial are so far being relatively resilient despite the imminent macroeconomic slowdown and geopolitical concerns.
“The strength seen in enterprise-facing markets comes from strategic investments by corporations looking to strengthen their infrastructure to continue supporting their workforce in Home Office, as well as business expansion plans and ongoing digitalization strategies,” says Gordon.
Memory industry revenue will drop by 16% in 2023 – For the remainder of 2022, the memory market will witness faltering demand, with stocks full and customers pushing for lower prices. As a result, the memory chip market will remain flat in 2022 and is expected to decline by 16.2% in revenues in 2023, according to Gartner's forecast.
Worsening economic prospects negatively impact smartphone production, PCs and consumer electronics, positioning the DRAM memory market for oversupply in the remainder of 2022 and, at least, in the first three quarters of 2023. Specifically for DRAM memories, the projection indicates a drop of over 18% in 2023, totaling US$ 74.2 billion in revenue.
The disruption of NAND-type chip manufacturing, which occurred in the first quarter of 2022, raised prices and masked a rapidly deteriorating demand environment, resulting in excess inventory in the third quarter of 2022, which is expected to continue into the first half of 2022. 2023. NAND industry revenue is expected to increase by 4.4%, jumping to US$ 68.8 billion in 2022, but is on track to decline by 13.7% in 2023, adding revenues to US$ 59.4 billion.
“Although the deteriorating macroeconomic environment weakens consumer demand, we expect relatively better semiconductor consumption from business investments. Consequently, markets such as industrial, telecommunications infrastructure and data center will be less affected by consumer sentiment and spending in the short term”, highlights the Gartner analyst.
