Global semiconductor revenue is projected to decline by 3.6% in 2023 with the market on track to grow by 4% and a total US$618 billion. Huh?
“The short-term outlook for semiconductor revenue has worsened,” said Richard Gordon, practice vice president at Gartner. “Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”
Global semiconductor revenue is forecast to total $596 billion in 2023, down from the previous forecast of $623 billion (see Table 1).
Table 1. Semiconductor revenue forecast, worldwide, 2021-2023 (Billions of U.S. Dollars)
Source: Gartner (November 2022)
Gartner warns that the semiconductor market is polarised between consumer-driven and enterprise-driven markets.
Weakness in the consumer-driven markets is being driven largely by the decline in disposable income caused by rising inflation and interest rates, but also by the reprioritization of consumer discretionary spending to other areas such as travel, leisure and entertainment, which are having a negative knock-on effect on technology purchases.
But in the enterprise-driven markets, such as enterprise networking, enterprise compute, industrial, medical and commercial transportation, companies have remained relatively resilient despite looming macro-economic slowdown and geopolitical concerns.
“The relative strength in the enterprise-driven markets comes from strategic investments by corporations looking to strengthen their infrastructure to continue supporting their work-from-home workforce, business expansion plans and ongoing digitalization strategies,” said Gordon.
Memory revenue to decline 16% in 2023
For the remainder of 2022, the memory market is witnessing faltering demand, swollen inventories and customers pressing for considerably lower prices. As a result, the memory market will remain flat in 2022 and is forecast to decline by 16.2% in revenue in 2023.
The worsening economic outlook is negatively impacting smartphone, PC and consumer electronics production which is positioning the DRAM market for oversupply for the remainder of 2022 and the first three quarters of 2023. Gartner analysts foresee DRAM revenue to decrease 2.6% to reach $90.5 billion in 2022 and will further decline 18% in 2023, to total $74.2 billion.
The NAND fab outage which occurred in the first quarter of 2022 increased prices and masked the rapidly deteriorating demand environment, resulting in excess inventory in the third quarter of 2022 which is expected to carry into the first half of 2023. NAND revenue is projected to increase 4.4% to $68.8 billion in 2022, but it will decline 13.7% in 2023 to $59.4 billion.
“While the deterioration in the macroeconomic environment will weaken consumer demand, we expect relatively better semiconductor consumption from business investments. Consequently, markets such as industrial, telecom infrastructure and data centres will be less impacted by consumer sentiment and spending in the short term,” said Gordon.
