Semiconductor Market Continues To Decline

New research from Omdia reveals that the semiconductor market declined in revenue for a fifth straight quarter in the first quarter of 2023.

Source: Omdia

This is the longest recorded period of decline since Omdia began tracking the market in 2002. Revenue in Q1 2023 settled at US$120.5B, down 9% from Q4 2022. The semiconductor market is cyclical, and this prolonged decline follows the upsurge as the market grew to record revenues in each quarter between Q4 2020 through Q4 2021 following increased demand from the global pandemic.

The memory and micro processor chips (MPU) market are major areas of the chip market that are contributing to the decline. The MPU market in Q1 2023 was $13.1B, just 65% of its size in Q122 when it was US$20B.

The memory market fared worse, with Q1 2023 coming in at US$19.3B, just 44% of the market in Q1 2022 when it was US$43.6B. The combined MPU and memory markets declined 19% in Q123, dragging the market down to the 9% quarter-over-quarter (QoQ) decline. 

Commenting on the latest Omdia analysis, Cliff Leimbach, Senior Analyst said: “The semiconductor market is plagued by a lack of demand that has continued for multiple quarters and resulted in declining advanced strip processors (ASP) for many components. However, there is demand thanks to generative AI.

NVIDIA has seen strong revenue growth as they lead in this space, reversing the performance of most semiconductor companies to begin 2023, but other semiconductor companies have yet to take advantage of this space in a similar way.”

The decline of the memory market over the last three quarters has rearranged the market share rankings. One year ago, three of the top five companies by revenue were memory companies, Samsung, SK Hynix, and Micron.

Only Samsung remains in the top ten rankings. The last time both SK Hynix and Micron were not in the top ten rankings was in 2008 illustrating the struggles faced by memory-focused semiconductor companies.  

NVIDIA released their financial results after publication of the CLT report, and surpassed estimates on strength of the company’s generative AI chips due to strong demand.

Infineon moved into the top ten this year following an 11% increase QoQ due to its strength in the automotive sector.

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