Omdia's research shows semiconductor market declined

This decrease is in line with the typical first-quarter downturn, where the market usually drops by 4.4% in revenue after a robust fourth quarter driven by seasonal demand. Most segments within the semiconductor market experienced declines this quarter.

The consumer segment was the hardest hit, plummeting by 10.4% from the fourth quarter of 2023, while the industrial segment dropped by 8.5% due to inventory adjustments. Even the automotive segment, which had seen steady growth for years, declined by 5.1% in the first quarter of 2024.

However, these declines were partially offset by growth in the data processing division, which increased by 3.7%. This growth was driven by the sustained high demand for NVIDIA’s chips and other AI-related products. NVIDIA continues its strong growth trajectory, expanding its market share by more than two percentage points to 14.5% of the total semiconductor market revenue. Despite surpassing traditional semiconductor leaders Samsung and Intel, who collectively hold 18.6% of the market revenue, NVIDIA continues to gain ground. Additionally, with the resurgence of memory growth, SK Hynix and Micron have risen in their market share rankings.

The automotive sector, which initially resisted the industry-wide semiconductor market growth triggered by the Covid-19 pandemic, eventually experienced a decline but quickly recovered. After 13 consecutive quarters of revenue growth starting in the third quarter of 2020, the automotive segment saw a slight downturn of 0.6% in the fourth quarter of 2023.

This decline deepened further in the first quarter of 2024 with a more substantial drop of 5.1% from the previous quarter. This downward trend reflects a broader slowdown in the demand for cars. The growth rate of electric vehicles (EVs) has tapered off in recent quarters, prompting a recalibration in semiconductor demand. Despite these challenges, the automotive semiconductor market remains a promising long-term growth area, poised for expansion over the next five years.

Omdia's Global Semiconductor Manufacturing Market Tracker (GMMT) and the Pure Play Foundry Tracker (fourth quarter 2023 reports) indicate that combined factory utilisations (IDM and Foundry) reflect the overall trend within the semiconductor industry. After peaking during the early stages of the COVID-19 pandemic in 2022, utilisation rates plummeted in the second half of 2022 due to significant softening in demand and record-high inventory levels. Despite semiconductor revenue growth throughout 2023, fab utilisation rates have remained in the low 80% range.

Omdia Chief Analyst Craig Stice said: “Utilisation rates began a slight uptick in 2H23 as the market began seeking equilibrium. However, it has yet to materialise as traditional demand patterns have not fully emerged. Demand will continue to improve in 2H24, which should lead to inventory corrections consequently driving up factory utilization rates once again.”