Penn stays with gloomy 2023 semiconductor market outlook

Stronger Q1 numbers have led Penn to moderate his forecast to a 20% fall in the global semiconductor market.

But to show any sign of real progress sequential growth would have to kick in now.

Penn dismisses that notion.

“A single digit decline would need Q2 to be positive and that is not going to happen,” says Penn. “TSMC is predicting a 4% to 9% quarterly decline so a single digit decline doesn’t stand up to scrutiny.”

He sees Q2 falling 5%, Q3 slipping 0.6% and Q4 sliding 2.5%. His bullish forecast is a 17% decline in 2023. His bearish forecast is a 22% downturn.

“There is some evidence that the storm clouds are behind us,” says Penn. “There is an inventory in progress, finally. The March shipments run rate was 6.2 million units a week, down 24% from its 8.2 billion units peak.”

The current run rate is down 15% from actual demand (the deficit is industry burn).

Penn doubts that the inventory depletion will be over before the fourth quarter of this year, and he adds, “It could be longer if end demand softens.”

Average selling prices (ASPs) drooped 12.6% year on year.

“ASPs plummeted in June 2022 wiping out 85% of the previous 18 month’s gains in one month.”

What will happen in 2024? “It’s too early to tell,” says Penn. “Statistically the market should be back into low-digit positive growth. The magnitude and timing depends on the global economy.”