Chipmaking equipment sales are forecast to shrink by 18.6% globally for all of 2023 following a record year in 2022, according to industry officials who are also projecting a solid recovery in 2024.
“Despite current headwinds, the semiconductor equipment market is set to see a strong rebound in 2024 after an adjustment in 2023 following a history multi-year run,” said Ajit Machoa, SEMI CEO. SEMI represent 2,500 companies active in electronics design and manufacturing.
The top three markets for equipment purchases in 2023 and 2024 will remain as China, Taiwan and Korea, with China returning to the top spot in 2024, SEMI said.
SEMI based its forecast on data from top equipment suppliers and chip and fab forecast databases.
Chip equipment sales will reach $87.4 billion in 2023, down 18.6% from $107.4 billion in 2022. The 2024 recovery is expected to hit $100 billion.
The expectation of a decline for equipment sales falls in line with dismal chip sales globally, with May down 21% from a year earlier even as sales have increased for the past three months. Semiconductor Industry Association officials are optimistic for a possible market rebound in chips during the last half of 2023.
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Analysts at IDC this week also noted a six-quarter decline in PC shipments amid a roller coaster supply and demand period lasting five years.
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SEMI’s expectation of a strong rebound for chip manufacturing gear in 2024 is in line with successes by equipment manufacturers largely because of the interest in making advanced chips for generative AI jobs.
In one example,key equipment maker ASML, based in the Netherlands, has seen its shares soar by more than 30% in the first half of 2023. The company makes extreme ultraviolet lithography equipment, a key component in the production of advanced chips. Such chips include GPUs from Nvidia, which itself has seen its stock soar with the introduction of ChatGPT last November.
Investors have been watching the impact of US government trade sanctions announced last year on sales of advanced chips and advanced chipmaking machines to companies based in China. China is one of the largest markets for chip technology.
Whether the US sanctions blunt many sales for ASML or Nvidia, the generative AI trend is expected to last many years into the future affecting all regions and not only China. Chipmaking gear will also be important to companies building new fabs in the US and Europe, such as Intel and Micron, who were motivated to expand partly with the US CHIPS Act approved by Congress to offer grants and tax incentives to foundries.