A recent report from semiconductor market research analyst TrendForce estimated a 4% year-on-year downturn in semiconductor sales for 2023 due to slow inventory consumption across the supply chain.
TrendForce’s forecasts follow a 9.2% fall in global semiconductor sales in November 2022 following a 4.6% year-on-year decline in October.
Global economic downturn will remain the biggest variable impacting demand, according to TrendForce analyst Joanne Chiao.
Analysts at Jefferies expect the downcycle to hollow out in the middle of the year, with share prices to bottom a few months before the trough.
Taiwan Semiconductor Manufacturing Company (TSMC), the largest foundry by a wide margin, could be cushioned from the downcycle for a couple of key reasons, not least its top-shelf client base which includes Apple (NASDAQ:AAPL), Nvidia, AMD, Qualcomm (NASDAQ:QCOM), MediaTek and Broadcom (NASDAQ:AVGO).
TSMC is also ahead of the curve innovation wise, and while its capital expenditure has been guided down 6% year on year, that still leaves US$34bn to dedicate to developing advanced nodes.
The company is also ramping up production of bleeding-edge 2nm chips to be rolled out in 2025.
Samsung Electronics (KRX:KS:005930), on the other hand, is facing the prospect of a grim year for sales due to slowing demand and lower prices for memory chips (whereas TSMC’s advanced microprocessors remain in comparatively high demand).
Prices of DRAM and NAND Flash chips fell 0.5% and 1% respectively in the second week of January alone.
Taiwan Semiconductor’s shares were up 11% year to date as of Thursday, January 19, while Samsung shares on the Korean exchange were seen 10% high in the same period.