Semiconductor Industry Watch (ID:icbank) is integrated from baron, etc., thank you.
For those who boast that they will recover in the second half of the year, things may not be good. Two major computer chip companies now admit that demand for personal computers is fading beyond their already pessimistic prospects.
Bernstein analyst Stacy Rasgon released a report on Monday after meeting with Intel Corp executives. The main gain is that the PC market is "getting worse."
$Advanced Micro Devices (AMD.US)$和$Intel (INTC.US)$The x86 chip architecture is used to make processors that act as the primary computing brain for PC and servers.
For Intel Corp, the company's chief financial officer, David Zinsner, told Rasgon,PC that the market was "down 10% from the company's offer in July."[And 2021]Compared with the annual PC market guidance, it has worsened further. The executive did not provide a revised outlook. Zinsner said the data center market had weakened due to weak sales in China and a more difficult macro environment.
The analyst also met with Dan McNamara of AMD, head of the chipmaker's business server division. The AMD executive revealed that the current PC environment is "chaotic" and customers' prospects are lower than expected. AMD said the trend in the PC market was worse than its previous PC market outlook, which was "10 per cent" lower than last year.
Rasgon has a lower rating on Intel Corp's stock than the market, with a target price of $30. He rated AMD shares as better than the broader market, with a target price of $135.
Intel Corp shares fell 0.8 per cent to $29.00 in Monday trading, while AMD shares fell 0.3 per cent to $76.28.
In April, Intel Corp predicted that the PC market would rebound in the second half of this year. But in the next few months, the business situation will only get worse. Global PC shipments fell 15 per cent year-on-year in the June quarter, according to IDC. Subsequently, Intel Corp and AMD lowered their forecasts for the PC market for the whole of 2022 when they reported their second-quarter results.
But now both companies say the overall PC market is performing even worse than they had lower expectations. This does not bode well for their future results.
Semiconductors ushered in the biggest recession since 2000
According to the latest data from Future Horizons, the semiconductor industry is heading towards its biggest recession since the dotcom bubble in 2000 and one of the biggest in the history of chip manufacturing.
After growing by 4 per cent in 2022, the market in 2023 will fall by nearly 1/4 to return to $450 billion, says Malcolm Penn of Future Horizons, which accurately predicted current market conditions. This is compared with other forecasts of 11% growth in 2022, the forecast has been lowered from the earlier more optimistic forecast, and "due to the deterioration of the economic outlook," Penn said.
In the company's September update, he said it was the 17th downturn in the industry and was driven by a range of factors, including rising inflation, the global recession, rising interest rates and China's aggressive COVID-19 epidemic strategy that disrupted the supply chain. "there is a huge inventory problem there, so it will be hit, but eventually every product line will be hit, so in the third quarter of this year, you will see a lower tone of the industry and less' enthusiastic 'response."
But he said the cycle would continue and the industry would return to growth in 2024 and to $1, 000bn by 2032, several years later than the more optimistic forecast.
"you will see a series of rebounds in the market," he said. "We do believe that the average annual growth rate in unit terms is 8%, but if the growth rate is-22% next year, it will be single-digit growth by 2024, so $1 trillion is certain, but it is more like 2032. The industry is not running out of steam."
"the real winners are the design that grew during the downturn, and the EDA industry, because we are always designing to get out of the doldrums. You have to invent a way out of recession, but recession is the time to really gain market share, "he said."
"what should happen is that we should invest crazily, but this will not happen and the plan will be delayed, which will provide the impetus for the next improvement," he said. "you have the dilemma that the industry structure is driving the industry cycle and we will see big cuts in capital expenditure, and then they will be at least a year behind 2021 and every other improvement.
The 17th downlink cycle of semiconductors officially begins.
According to Malcolm Penn, author of semiwiki, some people have been firm, but what has been widely denied by the industry was confirmed in the WSTS Blue Book report in June. He stressed that the current semiconductor supercycle is finally coming to an end and the 17th market downturn has really begun.
Macroscopic evidence
At the macro level, as shown above, the global semiconductor momentum index passed the "death cross" in March 2022, heralding storm clouds on the horizon; market data in June witnessed the start of the storm.
Gloomy rumors are also beginning to seep into industry awareness, especially in commodity markets, where several second-tier contract factories and IDM are reportedly considering curtailing or delaying their planned capacity expansion.
GlobalFoundries has warned that its capacity utilisation is expected to decline in the second half of the year due to cuts in orders from its fab-less customers, and Samsung is reported to have suffered a similar impact.
The downstream chain reaction in the semiconductor equipment and materials industry has begun to have an impact, and some companies are beginning to see delays and delays in the second half of the year.
Both PC and smartphone shipments, the two major drivers of the semiconductor market, declined in the first half of 2022. PC shipments are reported to be at their lowest level since 2019 and smartphone shipments are expected to show negative growth in 2022.
Products that require specific manufacturing capabilities, such as cars, still show signs of falling short of demand, but as potential customers are now squeezed and struggled by inflation and soaring energy costs, eventually demand for cars may weaken to buy the new car.
With the declining demand for consumer MCU, display drivers, power management and other mass market chips, almost all established node fabs have seen their customers scale back their wafer start-ups in the second half of 2022, prompting several second-and third-line foundry to start cutting prices. There are even rumors that some companies will offer discounts and deals for additional wafer orders to maintain their fab utilization.
However, we believe that these actions will be futile given the industry-wide pressure and the need for customers to unload bloated inventories caused by supply shortages over the past two years.
Time will tell whether the customer has violated their long-term agreement (LTA) to ease inventory pressure, or what actions the supplier can actually take if they do.
Although Taiwan Semiconductor Manufacturing Co Ltd is generally in a better position, because of its market dominance, especially on the frontier-by definition, cutting-edge capacity is always in short supply-given the wide diversity, it is also unable to get rid of the end market that is affected by the downturn.
We believe that if Taiwan Semiconductor Manufacturing Co Ltd implements his plan to raise prices against the market in 2023, Taiwan Semiconductor Manufacturing Co Ltd really needs to be cautious in this respect if he is to avoid the inevitable antitrust challenges of market exploitation and skyrocketing prices for his customers and competitors.
The devil is in the details
In detail, monthly shipments and average selling prices of IC fell 10.6 per cent and 14.9 per cent respectively in June, leading to an astonishing double-digit decline in sales of 23.9 per cent. Last month's comparable figures were 3.3%, 7.8% and 11.4%, respectively.
The inventory adjustment we warned is inevitable and is now beginning to show by reducing unit shipments, with monthly growth in all sectors negative compared with May. This is a far cry from the unit growth result in May, which showed that all sectors were still growing, with the exception of microstocks, which fell slightly by 0.6 per cent.
The reduction in unit shipments will quickly translate into a sharp reduction in new orders, bearing the pressure on fab capacity and eventually shortening delivery times, just as the first wave of capacity increases is about to be launched.
Meanwhile, IC ASP fell by an eye-popping 14.9% in June compared with may, with memory falling the most, by 19.0%. Micro-ASP fell by 8.5%, followed by logic by 7.2% and simulation by 3.7%.
To make matters worse, the IMF reported in its mid-year report in July that the global outlook was bleak and more uncertain, cutting its 2022 GDP forecast from 3.6 per cent to 3.2 per cent, and the vast majority of economic risks are now downwards.
It is this combination of negative average selling price growth, declining unit shipments, increased capacity and weak global economy that will lead to negative growth in the semiconductor market in 2023.
Market outlook
It is true that most companies are still reporting strong second-quarter results and full orders for the third / fourth quarter of 2022, but at the same time, many companies are now beginning to admit that these orders are easy to evaporate.
When we released a 6.0% growth forecast for 2022 in May 2022 and contracted by 22.0% by 2023, we were still the only analyst warning of an impending recession. Even if our forecast is optimistic, it may happen. According to the forecast that the second quarter will grow by 1.5% compared with the first quarter of 2022, the real growth is only 0.5%, and our forecast for May 2022 has now been pushed into a bear market.
Although we do not intend to formally downgrade our forecasts, when we issued a warning at the end of last year, we were more certain that we correctly called it the 2022 recession. Before that, it can be said that our 2022 forecast now has no room to rise.
Now, all industry hopes for double-digit growth in 2022 have been dashed.