A recession in the semiconductor market is coming in the fourth quarter of 2022 or the first quarter of 2023, says Malcolm Penn, leading industry analyst, Future Horizons.
Penn was speaking at an online conference where he provided his forecast for the global chip market in 2022. His analysis is that market momentum is at a turning point with a collapse likely to occur in 4Q22, possibly be masked by the normally seasonal slowdown. Penn’s average estimate is for 10% annual growth in 2022, with the fourth quarter hit hard.
Penn’s mid-range forecast is just below IC Insights’ forecast of 10.8% growth, but ahead of the 8.8% growth figure given by semi-global trade statistics. drivers at the end of 2021. Other analysts have also predicted overcapacity in 2023, with the shift to construction plants. in the United States and Europe, what is called onshoring, as the biggest risk.
These plans to build capacity in multiple regions – US, Japan, Europe – are likely to be concentrated behind the peak and result in overcapacity in 2023 and 2024 and possibly further into the future, Penn warned. .
Penn observed that the increase in initial capital expenditures in 2H21 was 75% higher than the long-term average as a percentage of sales, which is likely to lead to overcapacity as demand stabilizes. Current demand includes double orders and inflated markets from rising average selling prices, Penn said. When companies start burning inventory, orders will dry up and ASPs will decline, he added.
Penn pointed out that the main foundry, Taiwan Semiconductor Manufacturing Co. Ltd., remains committed to Taiwan and only installs capabilities overseas that will remain state-of-the-art when they go live. Penn said he sees TSMC as an exemplary player in the chip market, but others are piling in and may not succeed, and at the same time China is building its own capacity to cut chip imports.
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