Weak demand, global slowdown to drag semiconductor industry revenues: Gartner

Revenues projected to decline 3.6 per cent to $596 billion in 2023

The global semiconductor industry is likely to report a decline in revenues in 2023, owing to weak demand and fears of recession in the global economy.

Research firm Gartner has projected a 3.6 per cent decline in revenues at about $596 billion in 2023, as against 4 per cent growth at close to $618 billion in 2022.

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“The short-term outlook for semiconductor revenues has worsened. A rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023,” said Richard Gordon, Practice Vice-President at Gartner.

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“Weakness in consumer-driven markets is driven largely by the decline in disposable income, caused by rising inflation and interest rates,” Gartner said.

Reprioritisation of consumer discretionary spend to other areas such as travel, leisure and entertainment have also led to the likely decline in revenues.

It, however, said enterprise-driven markets, such as enterprise networking, enterprise compute, industrial, medical and commercial transportation, have been relatively resilient, despite a looming macro-economic slowdown and geopolitical concerns.

Slump in memory revenues

The memory market will remain flat in 2022 and is forecast to decline 16.2 per cent in 2023.

The worsening economic outlook has had a negative impact on smartphone, PC and consumer electronics production. This could result in DRAM revenues declining by 2.6 per cent to $90.5 billion in 2022. “It will further decline 18 per cent to $74.2 billion in 2023,” it said.

“While the deterioration in the macroeconomic environment will weaken consumer demand, we expect relatively better semiconductor consumption from business investments. Consequently, markets such as industrial, telecom infrastructure and data centres will be impacted to a lesser extent by consumer sentiment and spending in the short term,” it said.