A weak memory market and U.S. sanctions on China semiconductor producers are two driving factors behind the expected -19% drop in semiconductor capital spending in 2023.

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At the start of this year, semiconductor suppliers were enjoying a strong influx of orders due to robust post-Covid-19 economic activity.  Booming demand pushed most wafer fab utilization rates well above 90%. Many semiconductor foundries operated at 100% utilization. Capital spending budgets for 2022 were set in place to reflect the strong ongoing demand.

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Collapsing memory prices and uncertain global economy weigh on next year’s growth.

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Total semiconductor sales include the combined sales of ICs, optoelectronics, sensors and actuators, and discretes (O-S-D) components. After soaring 25% to $614.7 billion in 2021, worldwide semiconductor sales are expected to increase 3% in 2022 and to a new record sales level of $636.0 billion this year (Figure 1).

Read the rest of After Record Sales in 2022, Semi Sales Forecast to Fall -5% in 2023

Inflation, recession concerns stunt demand for PCs, smartphones, other consumer goods leading to -40% decline in 2H22 DRAM sales.

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The DRAM market often enjoys robust sales in the second half of the year when system makers place orders for memory to use in their new generation of products that they plan to release for the year-end holiday season.  That scenario has not panned out this year. Weakening economic conditions and high inflation rates have slowed global demand for personal computers, mainstream smartphones, and other consumer electronics.  As a result, DRAM demand has spiraled downward and sales are now forecast to fall -40% to $29.3 billion in the second half of 2022 compared to $49.0 billion in 1H22 (Figure 1).  For all of 2022, the DRAM market is forecast to fall -18%.

Read the rest of Tale of Two Halves for DRAM Market

Tight supplies of devices in automotive, industrial, and embedded-control applications drive up prices, causing double-digit percentage revenue growth in most sensor categories, says update report.

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Fueled by the spread of “smart” embedded controls and higher selling prices due to tight supplies in the market, semiconductor sensor sales are forecast to continue to register double-digit percentage growth in 2022 compared to last year, says IC Insights’ upcoming November 4Q22 Update of The McClean Report service. However, weakening economic conditions and high inflation rates around the world have slowed sensor unit demand in consumer electronics, personal computers, and mainstream smartphone segments since the start of summer.
Read the rest of Sensor Sales Stay Strong Due to Biggest ASP Rise in Two Decades

Notably, the IC market has never shown more than three sequential quarters of decline!

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The November Quarterly Update to the 2022 McClean Report will be released later this month.  This Update includes a discussion of the 2022-2026 semiconductor industry forecast by major product type, an updated forecast for semiconductor industry capital spending through 2026, and a look at the expected top-25 2022 semiconductor suppliers.

Over its 60-year history, the IC industry is well known for its cyclical behavior.  Looking back to the mid-1970s, there hasn’t been a period where the IC market declined for more than three quarters in a row. Following a 9% drop in the 3Q22 IC market, and assuming the 4Q22 and 1Q23 IC markets register a decline, the 3Q22-1Q23 timeperiod would mark the seventh three-quarter IC market drop on record (Figure 1).

Read the rest of After 1Q23 Bottom, Expectations Increase for a 2Q23 IC Market Rebound

Tight supplies, device shortages are driving up the average selling price of power transistors by the highest percentage since 2010, says update report.

Power transistor sales are on pace to grow 11% in 2022 and expected to reach a sixth-straight record high level, totaling $24.5 billion this year, primarily because of the highest increase in the average selling price (ASP) for products in this large discrete semiconductor segment in more than a decade. The ASP for power transistors is expected to rise 11% in 2022 after increasing 8% in 2021, according to the third-quarter update of The McClean Report service.

Last year, power transistor sales climbed 26% due to a 13% increase in unit shipments and bottlenecks in the expansion of production capacity that drove up the ASP.  The string of record-high sales for power transistors is projected to end in 2023 when revenues are forecast to drop 2% to $24.0 billion as a result of a slowdown in global economic growth next year and a 4% drop in the average selling price of devices.  Figure 1 shows the power transistor market is expected to begin another growth cycle in 2024, with annual sales steadily increasing through 2026 and hitting $28.9 billion, which represents a compound annual growth rate (CAGR) of 5.5%, based on the 3Q22 Update outlook..

Read the rest of IC Insights Bulletin: Power Transistor Sales and ASP Will Both Increase 11% in 2022

Monthly DRAM sales drop as end-users adjust inventory levels; consumer spending succumbs to inflation/recession pressure.

A vigorous DRAM market upturn that started in the last half of 2020 and continued through May 2022 is, by all accounts, over, according to data released in IC Insights’ August 3Q Update to The McClean Report 2022. After posting its highest monthly sales volume in more than two years in May, DRAM sales tumbled 36% in June and another 21% in July.  The market collapse was steep and swift—so much so that July’s DRAM market was about half the size it was in May (Figure 1).  Concern over soaring inflation and recession has cut into consumer spending on new smartphones, computers, TVs, and other electronic goods. In turn, system manufacturers have scaled back new DRAM orders, citing the need to burn through existing inventory that they have amassed.

Read the rest of DRAM Market Deflates, Cyclical Downturn Looms

Optoelectronics’ biggest product category is expected to suffer its first sales decline in 13 years because of a smartphone slump, low camera growth in handsets, and weak global economy, says update report.

For most of the last two decades strong growth in CMOS image sensors pushed this product category to the top of the optoelectronics market, in terms of sales volume, generating over 40% of total opto-semiconductor annual revenues.  In 2022, however, the CMOS image sensor market category is on track to suffer its first decline in 13 years with sales expected to fall 7% to $18.6 billion and unit shipments projected to drop 11% to 6.1 billion worldwide, according to IC Insights’ August 3Q Update of The McClean Report service (Figure 1).

The projected 2022 decline in CMOS image sensors comes after two years of meager sales growth in 2020 (+4%) and 2021 (+5%).  This year’s sales drop reflects overall weakness in consumer smartphones and portable computers with digital cameras for video conferencing following an upsurge in demand for Internet connections and online conferencing capabilities during the Covid-19 virus pandemic.  The 3Q Update forecast shows a modest recovery in CMOS image sensors next year with market revenues growing 4% to $19.3 billion and then rising 13% in 2024 to reach a new record high of $21.7 billion.

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Without more megadeals, this year’s value of planned acquisitions will probably fall short of the annual average, says new update report.

After slowing significantly in the last half of 2021, the pace of megadeals for semiconductor mergers and acquisitions regained momentum in the first six months of 2022, according to M&A data contained in IC Insights’ August 3Q Update of The McClean Report service.  So far this year, four large agreements have been announced—each valued between $1.9 billion and $9.4 billion, pushing the combined 1H22 M&A total to $20.6 billion (Figure 1), said the new 3Q Update report.

In comparison, the first-half 2021 total value of M&A agreements for semiconductor companies, assets, product lines, and related business operations totaled $18.2 billion, including four that were announced with price tags between $1.4 billion and $7.1 billion.  In the last six months of 2021, the combined value of new semiconductor M&A deals was $4.4 billion—the lowest total for the second half of a year since early last decade, according to the 3Q Update.

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2020-2022 expected to be the first 3-year period of double-digit capex growth since 1993-1995.

IC Insights has adjusted its 2022 worldwide semiconductor capital-spending forecast that now shows a 21% increase this year, to $185.5 billion (Figure 1).  The revised outlook, which was included in IC Insights’ recently released August 3Q Update to The McClean Report, represents a decrease from $190.4 billion and 24% growth that was forecast at the beginning of this year. Though lowered, the revised capex forecast still represents a new record high level of spending. In fact, if industry capital spending rises as forecast by a double-digit amount this year, it will mark the first three-year period of double-digit capital expenditure gains in the semiconductor industry since 1993-1995.

Read the rest of Semi Capex On Pace For 21% Growth to $185.5B This Year