20 May 2024 -
 Industrial

Shoots of recovery in global semicon manufacturing

electronics-wafer

The global semiconductor manufacturing industry showed promising signs of recovery in the first quarter of 2024, according to the Semiconductor Manufacturing Monitor (SMM) Report released by SEMI, the Semiconductor Industry Association, in partnership with TechInsights.

Electronic sales rose by 1% year-over-year (YoY) in Q1 2024, and are forecast to increase by 5% YoY in Q2 2024. IC sales experienced a robust 22% YoY growth in Q1 2024 and are expected to surge by 21% in Q2 2024, driven by the increasing demand for high-performance computing (HPC) chips and improving memory pricing. IC inventory levels also stabilised in Q1 2024 and are predicted to improve further in Q2 2024.

While the report highlights a positive trend in sales and inventory, it also notes that fab utilisation rates, especially for mature nodes, remain low and are not expected to recover significantly in the first half of 2024. Memory utilisation rates were also lower than anticipated in Q1 2024 due to controlled supply.

Semiconductor capital expenditures continue to be conservative, falling 11% in Q1 2024 following a 17% YoY decrease in Q4 2023. However, a modest 0.7% gain is expected in Q2 2024.

“Demand in some semiconductor segments is recovering, but the pace of recovery is uneven,” said Clark Tseng, Senior Director of Market Intelligence at SEMI. “AI chips and high-bandwidth memory are currently among devices in the highest demand, leading to increased investment and capacity expansion in these areas. However, the impact of AI chips on IC shipment growth remains limited due to their reliance on a small number of key suppliers.”

Boris Metodiev, Director of Market Analysis at TechInsights, added, “Semiconductor demand in the first half of 2024 is mixed, with memory and logic rebounding due to surging generative AI demand. However, analog, discrete, and optoelectronics have experienced a slight correction due to the slow recovery of the consumer market coupled with a pullback in demand from the automotive and industrial markets.”

Despite the mixed results in the first half of 2024, both SEMI and TechInsights anticipate a stronger recovery in the second half of the year. Metodiev stated, “A full-on recovery is likely to take hold in the second half of the year with the projected boost in consumer demand by AI’s expansion to the edge. Additionally, the automotive and industrial markets are expected to return to growth in the latter part of the year as interest rates fall – providing consumers more purchasing power – and inventory declines.”

The SMM report provides comprehensive data on the global semiconductor manufacturing industry, including key trends based on various industry indicators, a capital equipment market forecast, and two years of quarterly data with a one-quarter outlook for the semiconductor manufacturing supply chain.

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