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Market Analysis of the Latest Semiconductor Industry in Q1 2023
This year's Q1 consumer electronics market has been unable to recover. The overall demand for chips has been weakening, and it is deeply mired in the quagmire of "excess inventory", while consumer electronics occupies the largest market share in the entire semiconductor market. So far, the chip oversupply that started in the consumer electronics market has penetrated into broader markets such as enterprise and industry, and manufacturers are still clearing excess inventory at this stage. In addition, the oversupply has also led to a drop in chip prices. At present, consumer electronics is a drag on the steady growth of the entire semiconductor market.
Since the industry has entered the adjustment period, the delivery time of general materials of major brand manufacturers has been shortened (except for some special industrial control materials), which has a huge impact on spot distribution. At the front end of the spot market, about 60% of the terminals hold a wait-and-see attitude. Demand has decreased significantly, and vicious competition has occurred from time to time. According to the front-end sales staff in the market: some terminals do not stock up in advance for materials that are not in a hurry to go on the production line, and most of them are inquiries. The price of the same material purchased in February is at least one-third higher than that in March.
As of now, the inventory reduction of downstream manufacturers has not been completed. It was originally expected that 90% of the inventory reduction in Q2 this year will be completed. However, at present, the inventory level of many downstream manufacturers is still higher than expected. This situation exists in some high-priced manufacturers. It is still unacceptable to deal with inventory at a substantial discount, and major semiconductor manufacturers and manufacturers are pessimistic about their revenue in the second half of the year.
In the upper reaches of the semiconductor industry, the Dutch semiconductor equipment giant ASML’s Q1 revenue in 2023 also declined. The US Chip Act has restricted equipment sales to mainland China, and the Chinese market accounts for about 14% of ASML’s overall revenue. ASML’s annual performance will be significantly under pressure.
A weak economy, inflationary pressures, fluctuations in energy prices, declining consumer confidence, coupled with global geopolitical tensions and other factors have significantly hindered the growth of the semiconductor integrated circuit industry. To be conservative, various cost-saving plans such as personnel and marketing have been carried out in advance to survive the cold winter. But more companies remain optimistic about the future of the semiconductor industry.