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Date: 04/10/2022

Mid 2022 semiconductor market update: Mem and PC-CPU down and others not

In this semiconductor market mid-2022 brief study, we found computer and smart phone pulling semiconductor growth curve down while automotive and others taking it up. 2021 was a very good year for semiconductor industry where it grew by 26.2%. In the first half of 2022, the growth is lesser compared to 2021 but still grew. The latest figures from the semiconductor industry bodies:

World Semiconductor Trade Statistics (WSTS) has reported worldwide semiconductor market to rise by 13.9% in 2022 to reach US$ 633 billion and to grow by 4.6% in 2023. Another industry body Semiconductor Industry Association has shared monthly revenue data, where the semiconductor revenue in the month of July was US$ 49 billion, a decrease of 2.3% compared to June 2022.

Well this is about 1st half 2022. In the 2nd half of 2022, there is already one banging wakeup indication that semiconductor market to see drop in revenues in third quarter of 2022 compared to second quarter of 2022. If not every category, the semiconductor memory is nearly sure to see a big downslide. The leading memory manufacturer Micron has reported a revenue of US $ 6.64 billion for its quarter ending September 1, 2022, a significant 23% drop compared its revenue for its quarter ending 1st Jun 2022.

Let's look at broader electronics product market before looking into semiconductor product specific market:

Global notebook market: This is always a significant market for semiconductor and still remain so, although it's significance has lessened recently. Since from the second quarter of 2022, the sales of notebook computers is dropping. Latest study by TrendForce finds, in the second quarter of 2022 a total of 45.74 million units of notebooks were shipped, down by 17.7% compared to immediate previous quarter. The total notebook shipments in the second half of 2022 is estimated at 93.7 million units, down by 7.5% compared to 100 million units in first half of 2022. With an annual shipment in the range of 140 million units, computer display monitors revenue estimated to be down by 2 to 3% in the second half of 2022.

Global server market: Multiple market surveys forecast a good growth for servers in 2022. Counterpoint research forecasted global server market revenue to grow 17% year over year in 2022 to reach 111.7 billion. In terms of shipment global server shipments to rise 6% year over year in 2022 to reach 13.8 million units. In the second half of 2022, there is no indication of server market falling and it is expected to continue to grow in year 2023.

Smart phone market:
TrendForce has shared global smartphone production in the second quarter of 2022 is 292 million units, down by 6% compared to previous quarter. Compared to PC market, smartphone market is slightly better. Indian market, suppose to be always growing market in smartphones, see a 5% drop in shipment in 2nd Q 2022, compared to 1st Q 2022. Due to 5G, smart phone market to regain growth in 2023.

Industrial electronics market excluding automotive: This market is fragmented, with the presence of too many vendors in the market. Market research figures are not very reliable in this segment. However a growth of 10% can be expected for the full year of 2022, with no significant fall in revenue-growth in the second half of 2022.

Automotive Market: Global automotive electronics market demand is anticipated to be valued at US$ 300.3 Billion in 2022, as per Future Market Insights. After looking into mutiple market data, we see a 10% growth in automotive electronics market in 2nd half of 2022 compared to 1st half of 2022.

Product-specific semiconductor market:
Semiconductor Memory: Leading semiconductor memory manufacturer Samsung has warned slowdown of the demand for memory chips mainly in the PC and smart phone market. Not only Samsung , the other major memory chip maker SK Hynix sees sudden slowdown for memory chips starting at the end of second quarter of 2022. Though there are only half a dozen companies who control 80% of semiconductor memory market, but it's impact on the total revenue of semiconductor is significant.

Amid this weakening market signals, there is increase in investment going into semiconductor fab facility expansion by leading chip makers. U.S.-based semiconductor memory chip manufacturer Micron is investing more into building fabs in US. Micron announced plans to build the largest semiconductor fabrication facility in the history of the United States. Micron said it intends to invest up to $100 billion over the next 20-plus years to construct a new megafab in Clay, New York, with the first phase investment of $20 billion planned by the end of this decade. Micron recently breaks ground to build a new many memory manufacturing fab at Boise Idaho. Micron said this investment made possible by the anticipated grants and credits provided by the CHIPS and Science Act.

The leading semiconductor memory chip manufacturer SK Hynix to start construction of its new semiconductor fab M15 extension in Cheongju, Chungcheongbuk-do, South Korea. The new plant will be built from October-2022 on 60,000 square meters of land. An investment of 15 trillion Won is pumped in to this project over next five years.

All this is happening in the semiconductor memory area anticipating memory market revenue to grow 2X by 2030. This clearly indicates cyclical up and down is norm in semiconductor business.

Memory market had very good times nearly for about eight quarters starting from 3rd quarter 2020 to 2nd quarter of 2022. In the month of June 2022 memory market crash-landed, with nearly more than 30% drop in monthly revenue and it is continuing. Macroeconomic situation such as inflation, slow GDP growth along with slowdown of PC and smartphone market has its effect on memory market. However it is not as bad as previous memory market falls. In case of year 2000 during the dot-com burst, it was massive 70% decline.

Since from the second quarter 2022, NAND flash memory is being oversupplied and is sold at rock bottom price. There is excess inventory at the supplier side and demand is dropped to lowest level. Reducing growing inventory is priority for suppliers, so their plan is to sell at lesser price and reduce production levels. Suppliers do not want to move in to loss mode due to excessive production, particularly small suppliers.

Processor and SoC semiconductor revenue:
The market size of microprocessors for personal computers is around $ 45 billion in 2022, in the second half of 2022, a 10% decline of this market is expected compared to first half of 2022. Application processor market for smart phone can be estimated in the range of US$ 30 billion in 2022. Second half of 2022 is estimated to see a 5% decline in sales revenue compared to first half of 2022. Microcontroller is approximately a $ 30 billion market annually, this market is consistently growing from 2020 and expected to grow nearly at same rate around 10% in year 2022 will no drop of growth in second half of 2022.

The total automotive semiconductor market in 2021 is estimated at 69 Billion US$ and estimated to grow at 10 -15 % in 2022.

Industrial semiconductor: Industrial Semiconductor revenue is estimated to grow at 12 percent this year.

Analog IC market: IC Insights forecasted a 12% growth for Analog Ics in 2022, where its revenue to reach $83.2 Billion. We see the growth in 2nd half of 2022 as good as 1st half of 2022.

Vendor specific semiconductor revenue growth:

If we look at the PC and other non-smart phone computing market, Intel see a major sequential drop. It's quarterly revenue fell from $18.4 billion in 1st Quarter 2022 to $15.3 billion in 2nd Quarter 2022, down by 20.2% and it was $19.6 billion in 2nd Quarter 2021.

NVIDIA reported a revenue of US$ 6.70 billion for its recent quarter ending 31 Jul 2022 compared to US$8.228 Billion US$ for its quarter ending 31 Apr 2022, down by 22%.

2nd biggest PC Market and server chip maker AMD reported a revenue of US$ 6550 Million in Q2 2022 compared to US$ 5900 million in Q1 2022, sequentially up by 9% and compared to US$ 3850 Million in Q2 2021, what a massive year over year growth, due to Xilinx acquisition.

Both Intel and AMD now are also leading FPGA vendors where Intel acquired Altera, and AMD acquired Xilinx. In the FPGA semiconductor market revenue, AMD can be higher ranked in FPGA market. Both companies also into graphic processor market.

Qualcomm posted a revenue of 10.9 billion US$ for it's latest quarter close to 2nd Q of 2022, compared its earlier quarter where it reported a revenue of US$ 11.2 billion, sequentially down by 2.7%

Another smartphone SoC vendor MediaTek reported 2nd Quarter 2022 revenue of NT$155,730 million compared to its 1st Quarter 2022 revenue of NT$142,711 million, grew by 9.1%.

Renesas reported a revenue of 376.6 Billion Yen in 2nd quarter 2022 compared to its revenue of 346.7 Billion Yen in 1st quarter 2022, sequentially up by 8.6%.

TI reported a revenue of 5.21 billion in 2nd Q 2022 compared to 4.91 billion in 1st Q 2022, sequentially up by 6.1%

Infineon reported a revenue of 3.618 billion of its latest quarter ending 30th Jun 2022, up 10 percent on the preceding quarter and 33 percent year over year. Revenue of around 3.9 billion is predicted for its next quarter.

STMicroelectronics reported revenue of $3.84 billion for Q2 2022 compared 3.55 billion in 1st quarter 2022, sequentially up by 8.1%.

NXP Semiconductor reported a revenue of $3.31 billion in 2nd Q 2022 compared to its revenue of $3.14 billion in 1st Q 2022, sequentially up by 5.4%.

Analog Devices reported revenue of $3.1 billion for its latest quarter 2022 ending 30th July 2022, compared to its revenue of $2.97 billion for its quarter ending 30 April 2022, sequentially up by 4.3%.

Microchip clocked a revenue of 1.964 billion for its quarter ending 30 Jun 2022 compared to 1.844 billion US$ for its quarter ending 31 Mar 2022, sequentially up by 6.5%.

Marvell reported revenue for the second quarter of fiscal 2023 was $1.517 billion, grew 41 percent year over year and 5 percent sequentially.

Skyworks's revenue for its third fiscal quarter of 2022 was $1.233 billion, up 10% year over year.

Except server market, Computer market is seeing significant fall in revenue both in notebook and desktop. Smart phone market, if not falling that drastically is going down slowly. 5G penetration can lift smartphone market but not in immediate quarters. Automotive industrial market looks to be growing decently if not as good as 2021. Microcontroller, analog IC and power semiconductor and any such automotive and industrial electronics specific semiconductor chip market is growing.

General trend in semiconductor industry was, a higher revenue growth in second quarter and third quarter of the year, but in 2022 that trend is missing.

If you look at the macroeconomic factors affecting semiconductor market that includes slower GDP growth in 2022 compared to 2021, and no more work from home compulsion. There is also increased economic recession in some of the geographic regions. Since there is no significant increase in performance of new smart phones (except 5G) and computers, so there is no need for a cost conscious consumer to compulsorily to buy the new device. One more factor is geopolitical supply chain disruptions is impacting revenues of some regions.

Author: Srinivasa Reddy N
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