According to Ersa Electronics, the electronic components distributor may see a robust recovery in 2023, rising 13% to $588 billion by 2024, following a dismal year in which sales dropped 9.4% to $520 billion. Although the semiconductor sector is notorious for its cyclicality, forecasting is never easy. Ersa Electronics stated in its most recent Global Semiconductor Industry Outlook that the sector is expected to rebound in 2024.
The consultancy firm identifies a number of elements that support this upbeat perspective. Even with the difficult circumstances in 2023, the primary driver—the memory chip market—is anticipated to rebound and see sales return to levels seen in 2022. The stock market’s positive response is regarded as a leading signal; by mid-December 2023, the market value of the top 10 chip companies worldwide is expected to reach $3.4 trillion.
End markets that saw a downturn in 2023, like smartphones and personal computers, are predicted to grow by 4% by 2024. Since sales of computer and communications chips will account for 56% of all integrated circuits sales in 2022, this recovery is crucial for the semiconductor industry.
The Ersa Electronics report explores inventory and fab utilization, two important measures of industry health. With over $60 billion in inventory this fall, there will be a significant obstacle to sales in the first half of 2024. However, the report’s overall trend is positive. It is anticipated that the industry’s requirement for increased utilization will decline to less than 70% in the fourth quarter of 2023, suggesting that profitability may not be realized right away.
Five Keys Points on Chip Industry
Chips Powered by Generative AI Accelerator: According to the estimate, by 2024, sales of chips fueled by generative AI would surpass $50 billion, making up approximately 8.5% of overall sales. The very small unit size of these expensive chips, however, might have an effect on industry usage and overall manufacturing capacity.
Trends in Smart Manufacturing: To shed light on how the semiconductor manufacturing sector is changing, Ersa Electronics examines developments in smart manufacturing and the use of generative artificial intelligence in this sector.
Global Assembly and Test Capabilities: As a crucial component of the industry’s future development, the research emphasizes the necessity for the sector to expand its assembly and test capabilities worldwide.
Cyberattacks and IP Security: The intellectual property (IP) of the semiconductor industry is being targeted by cyberattacks, which might be dangerous for the sector.
Geopolitical Implications: The paper examines export restrictions for advanced node manufacturing technologies, equipment, and advanced generation AI semiconductors while taking the geopolitical environment into account.
Future Outlook of the Chip Industry
The continuous electrification trend, which will boost semiconductor content over the next ten years, is another factor driving IDC’s prediction that rising inventory levels in the automotive and industrial categories will normalize at 2H24. Along with much-needed improvements in memory ASPs and DRAM bit volumes, technology and big flagship product launches will drive the addition of more semiconductor content and value across segments from 2024 to 2026, including the introduction of AI PCs and AI smartphones next year, according to the study.
The resilience and innovative capacity of the semiconductor sector continue to be critical success factors for businesses as they navigate the market’s waves of change. Although there are still short-term obstacles to overcome, the long-term outlook indicates a revitalized semiconductor market that will present previously unheard-of growth and opportunity in the years to come.
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