28 Aug 2023 -

Semiconductor investments down but market remains optimistic

semiconductor manufacturing is working through backlog

Investment in equipment for semiconductor fabs is set to fall by 16% annually to US$122 billion in 2023, the first decline in four years and the largest in the past 10 years, claims Nikkei Asia.

The slowdown in demand in mainland China is leading to caution among semiconductor factories about investing in new capacity. The top 10 semiconductor factories will reduce their investment in memory chips by 44% annually in 2023, and their investment in logic semiconductors for computing will also decrease by 14%.

In recent years, governments of various countries have successively introduced semiconductor stimulus policies, which helped to drive investment in the sector to a record high of US$146 billion in 2022.

However, the global semiconductor market is now facing a number of headwinds, including the slowdown in demand in China, the ongoing chip shortage, and rising inflation. As a result, semiconductor factories are cutting production and investment.

As of the end of June 2023, the inventory of semiconductor chips had reached US$88.9 billion, an increase of 10% from a year ago and 70% from 2020. Micron has cut production by 30% and equipment investment by 40% due to severe excess inventory. SK Hynix has further expanded production cuts by 5-10% and investment by more than 50%.

Despite the challenges facing the semiconductor market, there are some signs of hope. The Semiconductor Industry Association (SIA) said that although global semiconductor sales in 2023 still lagged behind last year’s total, revenue rose for the fourth consecutive month in June this year, with a steady month-on-month increase. This gives people optimism that the market will continue to rebound in the second half of the year.

It remains to be seen how the semiconductor market will perform in the coming months. However, the decline in investment in semiconductor fabs in 2023 is a clear indication that the sector is facing some tough challenges.

Thousands of senior engineers and procurement professionals subscribe to our LinkedIn Market Intel newsletter – get yours here

For more help with looking at supply chain options, contact Astute Electronics

Related News

18 Jul 2024 - General

New Study Unveils Significant Value of Authorised Electronics Distributors

Read more

16 Jul 2024 - Defence

Astute Group Strengthens Embedded Computing Portfolio with AiTech Systems Distribution Deal

Read more

10 Jul 2024 - General

Counterfeit GPUs on the Rise: A Growing Concern for the Electronics Industry

Read more

09 Jul 2024 - General

DRAM Prices Skyrocket Amidst AI Boom and Production Shifts: A Deep Dive into the Memory Market

Read more

08 Jul 2024 - General

US Government Invests in Semiconductor Workforce to Combat Looming Talent Crisis, But Challenges Remain

Read more

07 Jul 2024 - General

Semiconductor Manufacturing Equipment Sales Expected to Explode

Read more