Recently, the International Semiconductor Industry Association (SEMI) released a new report stating that various key indicators in the global semiconductor industry have seen an increase in the first quarter of this year. It is estimated that the global semiconductor industry will experience stronger growth in the second half of the year, potentially heralding a comprehensive recovery.
The report highlights the current signs of improvement in the global semiconductor industry, including the warming up of electronic product sales, growth in chip sales, stabilization of chip inventories, and an increase in installed capacity in wafer fabs. The semiconductor market sentiment is improving, and a new cycle is accelerating towards arrival.
Forecasts from institutions project a complete recovery for the semiconductor industry in the second half of the year!
1. Warming Up of Electronic Product Sales
After experiencing a prolonged period of declining sales for consumer electronics such as smartphones, PCs, and tablets, there has been a turnaround, with market demand gradually improving and shipment speeds accelerating. According to data from SEMI, global electronic product sales in the first quarter of 2024 increased by 1% year-on-year, with an expected 5% year-on-year increase in the second quarter.
2. Increase in Chip Sales
Over the past year, the global semiconductor industry has faced a tough time with reports of cancellations, layoffs, production cuts, and closures. However, since 2024, the advent of AI has brought about an increase in storage demand, leading to a rebound in storage chip sales. With the rise in shipments of high-performance computing (HPC) chips and the sustained improvement in storage chip prices, chip sales in the first quarter of this year increased by 22% year-on-year. SEMI anticipates a further 21% increase in chip sales in the second quarter.
3. Stabilization of Chip Inventories
Starting in 2023, the global semiconductor industry has been actively reducing inventories, and now the destocking phase is nearing its end. SEMI notes that chip inventory levels stabilized by the first quarter of 2024 and are expected to further improve in the second quarter.
4. Increase in Installed Capacity in Wafer Fabs
The capacity of wafer fabs continues to increase, with the total installed capacity rising steadily and quarterly production exceeding 40 million chips (approximately 12-inch wafers). In the first quarter of 2024, there was a 1.2% increase in wafer fab capacity, with a further projected increase of 1.4% in the second quarter. Mainland China remains at the forefront of global capacity growth. However, there were no signs of recovery in wafer fab utilization rates in the first half of 2024.
SEMI's Chief Analyst, Clark Tseng, remarked, "Demand in certain semiconductor sectors is rebounding, albeit unevenly. AI chips and High Bandwidth Memory (HBM) are currently in high demand, leading to investments and capacity expansions in these areas. However, due to the dependency of AI chips on a few key suppliers, their impact on chip shipment growth remains relatively limited."
Additionally, in its latest report on wafer foundry industry, J.P. Morgan pointed out that the destocking phase in wafer foundries is coming to an end, and industry sentiment is expected to widely recover in the second half of 2024, further strengthening in 2025.
According to their analysis, the first quarter of this year marked the trough of industry sentiment, combined with the continuous rise in AI demand and gradual resurgence of non-AI demand. Importantly, urgent orders have started to emerge, including Large-sized Display Driver ICs (LDDICs), Power Management ICs (PMICs), WiFi 5, and WiFi 6 chips, all indicating a clear turnaround and recovery in the wafer foundry industry.