Menu
Monthly semiconductor sales drop as chip market takes another hit

Monthly semiconductor sales drop as chip market takes another hit

Chip sales are in decline as the market faces major economic headwinds, most notably in mainland China.

Credit: Dreamstime

Worldwide semiconductor sales are down 0.5 per cent in September, on a month-to-month basis, according to statistics released by the Semiconductor Industry Association, and down three per cent compared to September 2021, as demand continues to soften in the face of multiple macroeconomic difficulties.

According to the SIA’s report, September chip buying in the Americas region rose by 11.5 per cent compared to the same month in 2021, to a total of just over $12 billion, and upticks to $4.53 billion and $4.05 billion, respectively were seen in Europe and Japan.

Those gains, however, were more than offset by the mainland Chinese market falling by 14.4 per cent to $14.43 billion in the same time frame, along with a 7.7 per cent decline to $11.97 billion in all other markets.

The decline is the first year-on-year slowdown since January 2020, according to a statement issued by SIA president and CEO John Neuffer.

“The long-term market outlook remains strong, however, as semiconductors continue to become a larger and more important part of our digital economy,” he said.

While Nueffer’s bullishness is echoed by other longer-term forecasters, several other indicators of a short-term decline for the world’s silicon makers exist, including recent Intel earnings news that saw the company’s third-quarter revenue drop 20 per cent on a year-on-year basis.

Net income for the US-based chipmaker plummeted from $6.8 billion in the third quarter of 2021 to $1 billion in the most recent report, a drop of 85 per cent.

The chip industry is facing structural upheavals caused by changing US trade policy toward China, supply chain disruptions caused by Russia’s invasion of Ukraine, and a prevailing view that the global economy is headed for a recession, which has blunted demand.

A study released earlier this month by MIT and published in the Harvard Business Review highlighted that the “vast majority” of chip manufacturing takes place in Taiwan, China and South Korea, and that recent US moves — including the CHIPS Act — aimed at reducing the country’s dependence on overseas supply will take a long time to bear fruit.

“The optimistic estimate [for the construction time on new semiconductor facilities in the US] is at least two years,” the study’s authors wrote, noting that effective dependence on East Asia for chip supplies is a matter of assembly and testing facilities as much as raw manufacturing capability.

The latest trade restrictions, enacted by the US Commerce Department earlier this month, are likely to cause major problems for the Chinese domestic silicon industry, most prominently in the area of advanced chips. 

Overall, experts agree, current supplies of silicon have outstripped demand, even as individual markets, like the automotive sector, struggle with continuing shortages.


Tags semiconductor

Events

Show Comments