The downward global trend for chips and wafers continued in the first quarter, confirmed by sometimes drastically reduced revenues for the largest silicon companies as reported in Q1 earnings calls, but also by the latest tracking figures from large trade groups.
Global semiconductor sales dropped 21.3% in Q1 compared to a year earlier, according to the Semiconductor Industry Association on Monday. Meanwhile, silicon wafer shipments dropped 11.3% for the same period, according to SEMI Silicon Manufacturers Group on Tuesday.
“The decline in silicon wafer shipments reflects softening semiconductor demand since early this year,” said Anna-Riikka Vuorikari-Antikainen, chair of SEMI SMG and chief commercial officer at Okmetic, in a statement. “Memory and consumer electronics have seen the largest drops in demand while the market for automotive and industrial applications remains more stable.”
Intel and Samsung reported similar results for Q1 last week, with chip revenues down at Samsung by 49% on memory chip weakness and Intel revenues down by 36%, with the biggest declines in chip sales in client computing and data center and AI.
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Earlier last week, Texas Instruments reported revenues for chips used in personal electronics had dropped 30% in Q1 compared to a year earlier. Overall revenues were down 11% year-over-year, but automotive chip sales were up by mid-single digits.
RELATED: TI reports chips for personal electronics dropped 30%
SEMI SMG said global silicon wafer shipments in Q1 reached 3,265 million square inches which was down 9% from the previous quarter and 11.3% from the same quarter in 2022. Q4 2022 had also been down from Q3, which was up a small amount from the prior three quarters.
SIA said chip sales dropped in the first quarter “due to market criticality and macroeconomic headwinds” but CEO John Neuffer took heart that sales for March were up slightly, 0.3%, over February “providing optimism for a rebound in the months ahead.” The total of global sales in the first quarter reached nearly $120 billion, which was a drop of 8.7% from the prior quarter and 21.3% below the first quarter of 2022.
All regions saw sales decreases in Q1 year-to-year: Europe was down 0.7%, Japan down 1.3%, the Americas down 16.4%, Asia Pacific and all other down 22% and China down 34%.
A broad group of economists have traced a large part of the chip and wafer declines to lower demand after consumers and companies reduced buying of servers and computers. Consumption of such products was up during the pandemic, which led to increased chip and wafer production that has now resulted in excess inventory for many products. Economists term this phenomenon an inventory correction.