Anxiety and Waiting in the Semiconductor Industry

Sourc:The SiteAddtime:2023/6/1 Click:0

Due to the continuous decline in consumer electronics such as smartphones and PCs, semiconductor giants such as Intel and Samsung continued to suffer from a decline in performance in the first quarter. However, some sectors represented by automotive chips and semiconductor equipment still enjoy growing orders and abundant profits, which may become a lifeline for leading the semiconductor industry through the downward cycle. Meanwhile, the relentless growth of generative AI has given storage giants hope for a market recovery in the second half of the year. The global semiconductor industry will enter the final month of the second quarter amidst anxiety and waiting.

The first quarter that has not yet warmed up

The global semiconductor market did not reach a long-awaited turning point in the first quarter, but some business sectors have already produced a pulling effect. The automotive and cloud service sectors of the three major PC and data center processor manufacturers are generally bullish, with Nvidia becoming the biggest beneficiary of AIGC. Storage giants and contract manufacturing giants are still under pressure from market downturn and product price decline. Simulation and power semiconductor giants generally performed steadily with the support of the automotive business.

The storage market continued to be sluggish in the first quarter, with top storage manufacturers generally experiencing a decline in revenue in the first quarter. Due to continued weak demand in the storage business and inventory adjustments, Samsung's semiconductor division's profits have decreased compared to the previous quarter. Hynix was also affected by the continuous downturn in the memory semiconductor market and declining product prices in the first quarter, resulting in a decrease in operating revenue compared to the previous quarter.

The outsourcing giants are also facing a market headwind that has not yet turned. TSMC, which has always had strong performance, experienced a rare month on month decline in the first quarter. TSMC Chief Financial Officer Huang Renzhao stated that the weak macroeconomic environment and terminal market demand have led to customers adjusting their demand for OEM, resulting in a decrease in capacity utilization. It is expected that the business in the second quarter will continue to be affected by customer inventory adjustments. Samsung also stated that the utilization rate of its OEM business decreased in the first quarter.

However, Europe's IDM, which relies heavily on the consumer market, has generally shown stable performance, with particularly significant growth in automotive revenue. Yifa Semiconductor's revenue in the first quarter increased by 19% year-on-year, while the operating profit of automotive products and power discrete devices increased by 145% year-on-year. Enzhipu's revenue in the first quarter remained unchanged year-on-year, with its automotive business growing by 17% year-on-year, accounting for 58% of its overall revenue. Infineon's revenue increased slightly year-on-year in the second quarter (as of March 31, 2023), mainly benefiting from the increase in revenue from automobiles and green industrial energy.

The material, equipment, and EDA tool manufacturers in the upstream of the industrial chain, driven by the dual demands of the market and technological development, have also submitted stable financial data to leading enterprises. EDA major manufacturer Xinsi Technology, equipment major manufacturer Applied Materials, and ASML all achieved year-on-year growth in this quarter.

The second half of the year will show a gradual recovery trend

The unexpected weakness in terminal demand, the prolonged period of adjustment in the semiconductor industry, and the traditional peak season effect of semiconductors in the second half of the year are still full of variables. However, there is no insurmountable winter. The reporter learned in the interview that although the semiconductor industry is still in a state of anxiety and waiting, the overall recovery trend of the industry in the second half of the year is already a "small lotus only showing sharp edges".

Looking ahead to the third quarter, TSMC and Liandian, two major wafer foundries, will simultaneously reduce their estimated output value for semiconductor and wafer foundries this year. It is understood that due to factors such as high inflation and high interest rates, the overall economic environment is currently highly uncertain, and the supply chain has a conservative attitude towards stocking up. Customers often place urgent or short orders, resulting in unclear order visibility for some wafer foundries.

Liandian predicts that the company's revenue recovery from Sulido is weaker than expected, and the semiconductor industry's revenue may decrease by 4% to 6% this year, which is higher than the originally expected 1% to 3% decrease; The revenue of wafer foundry industry will decrease by 7% to 9%, which is higher than the originally expected 4% to 6% decrease.

TSMC predicts that the semiconductor industry will show a gradual recovery trend in the second half of the year, rather than a strong V-shaped recovery. Specifically, in various application fields, due to varying demand in different application markets, the television and computer markets have undergone inventory adjustments earlier, resulting in relatively hot demand and a stable industrial market.

Nvidia expects its revenue to reach $11 billion in the second fiscal quarter, achieving a month on month growth of approximately 53%. Rina Oshimo, an analyst at Okasan Securities in Japan, said that Nvidia's performance has increased the certainty of the semiconductor industry's expected recovery in the second half of the year.

AMD is optimistic about the situation in the second half of the year. AMD Chief Financial Officer Jean Hu stated that with the strengthening of the PC and server markets and the increase of AMD's new products, the company is confident in its growth in the second half of the year.

Storage giants generally maintain optimistic expectations for market demand in the second half of the year. Samsung stated that based on the expected gradual market recovery and global demand rebound, the semiconductor business unit will focus on high-capacity servers and mobile products in the second half of the year. Hynix expects the market environment to improve in the second half of the year. With the growth of the server market for artificial intelligence scenarios such as ChatGPT, the number of customers using high-capacity memory is increasing, which will have a positive impact on the market.

The demand in the semiconductor industry, in addition to periodicity, also has huge growth. "Li Tingwei, Senior Vice President and Chairman of Greater China at NXP, told China Electronics News that user demand and chip manufacturing cycle need to match each other. Enterprises need to have a keen insight into market demand and face the huge new demand through supply. Taking Enzhipu as an example, the company is continuously expanding its production capacity and ensuring market supply by signing more production capacity agreements with external factories.

With the new changes in the supply and demand relationship of semiconductors, the Chinese semiconductor industry will also enter the "second half" of its development cycle. Ma Qingjie, Director of Nanochip Microelectronics Product Line, told China Electronics News that many domestic manufacturers have experienced a golden window of rapid development in the "first half" and seized the opportunity to successfully achieve localization in some high barrier areas. Looking towards the second half of 2023 or even further into the future, it is expected that a group of strong and forward-looking domestic manufacturers can further improve their core capabilities through industry resource integration and optimization configuration.