Global Semiconductor Sales Decrease 2.9% Month-to-Month in November

[Daniel Nenni]

Worldwide chip sales down 9.2% year-to-year

WASHINGTON—Jan. 9, 2023—The Semiconductor Industry Association (SIA) today announced global semiconductor industry sales were $45.5 billion during the month of November 2022, a decrease of 2.9% compared to the October 2022 total of $46.9 billion and 9.2% less than the November 2021 total of $50.0 billion. Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average. SIA represents 99% of the U.S. semiconductor industry by revenue and nearly two-thirds of non-U.S. chip firms.

“Global semiconductor sales decreased in November, largely due to market cyclicality and macroeconomic headwinds,” said John Neuffer, SIA president and CEO. “Sales into the Americas were up compared to November 2021, while sales into China decreased sharply on a year-to-year basis.”

Regionally, year-to-year sales increased in November in the Americas (5.2%), Europe (4.5%), and Japan (1.2%), but decreased in Asia Pacific/All Other (-13.9%) and China (-21.2%). Month-to-month sales were down across all regions: Europe (-1.0%), Japan (-1.2%), the Americas (-1.4%), Asia Pacific/All Other (-3.0%), and China (-5.3%).

Additionally, a recent World Semiconductor Trade Statistics Organization (WSTS) industry forecast—endorsed by SIA—projects annual global sales will increase 4.4% in 2022 and decrease 4.1% in 2023. The forecast projects the industry’s worldwide sales will be $580.1 billion in 2022, up from the 2021 sales total of $555.9 billion. In 2023, global sales are projected to reach $556.5 billion. WSTS tabulates its semi-annual industry forecast by gathering input from an extensive group of global semiconductor companies that provide accurate and timely indicators of semiconductor trends.

For comprehensive monthly semiconductor sales data and detailed WSTS forecasts, consider purchasing the WSTS Subscription Package. For detailed historical information about the global semiconductor industry and market, consider ordering the SIA Databook.

Global Semiconductor Sales Decrease 2.9% Month-to-Month in November

Worldwide chip sales down 9.2% year-to-year WASHINGTON—Jan. 9, 2023—The Semiconductor Industry Association (SIA) today announced global semiconductor in

www.semiconductors.org

 

[Daniel Nenni]

Personally I think record inventory levels are the root cause of the current decline. Remember, the Semiconductor industry grew 26% in 2021 which is unheard of in our single digit growth industry. Another example, TSMC grew 40% and UMC grew 30% in 2022 stating that inventories are at a record high. Companies were double and triple ordering and now those same companies will use up inventories for the next few months. So no, the sky is not falling, we are just getting back to normal.

 

[jmlobert]

Personally I think record inventory levels are the root cause of the current decline. Remember, the Semiconductor industry grew 26% in 2021 which is unheard of in our single digit growth industry. Another example, TSMC grew 40% and UMC grew 30% in 2022 stating that inventories are at a record high. Companies were double and triple ordering and now those same companies will use up inventories for the next few months. So no, the sky is not falling, we are just getting back to normal.

A lot of companies stocked up because of parts shortages over the last two years, and are now facing low inventory turns as a result, so shedding excess inventory makes sense. However, if it is just inventory draw-down, why would revenue go down? Releasing inventory still creates revenue. You might see reductions in force and less purchases as a result, but not a loss of revenue. And the current drop is equal in magnitude to the 2008/09 event, both in percent and absolute dollars!

 

[Daniel Nenni]

A lot of companies stocked up because of parts shortages over the last two years, and are now facing low inventory turns as a result, so shedding excess inventory makes sense. However, if it is just inventory draw-down, why would revenue go down? Releasing inventory still creates revenue. You might see reductions in force and less purchases as a result, but not a loss of revenue. And the current drop is equal in magnitude to the 2008/09 event, both in percent and absolute dollars!

For the foundries this is true, 1H 2023 will be inventory reduction time for their customers. For the chip companies my guess would be that they are dumping inventory to get it off their books, to meet foundry purchase commitments, and get ready for newer chips. Plus as demand weakens prices generally drop so it a combination there of. I think we all learned not to cancel orders, at least the automotive companies did, so it is dump time for chips.

The big change in our business, in my opinion, is that the majority of foundry revenue is from systems companies and not chip companies. System companies are much closer to their customers so they are better at managing inventory and they do not dump product like the chip companies.

The biggest dumpers of course is memory companies and that is going to be very bad for the semiconductor industry on a whole in 2023. The logic business will do much better than memory in 2023. In fact, I believe logic will be a positive growth number this year. We shall see.