Q: Is there still a chip shortage?The semiconductor market is entering into a major correction cycle as demand for PCs, smartphones, tablets and consumer electronics has. In the fourth quarter of 2022, the Gartner Index of Inventory Semiconductor Supply Chain Tracking entered the moderate surplus zone. While the overall index is no longer in a shortage zone, there are still inventory imbalances, with an abundance of some chips and unavailability of others .
Fig. 1: Gartner Index of Inventory Semiconductor Supply Chain Tracking - Projected Worldwide Semiconductor Inventory Index Movement, 2022-2023For example, the memory market will see significant oversupply for most of 2023 due to weak end-equipment demand, despite the slowdown in production by vendors. Analog components are also headed to an oversupply due to weakening demand and new 300mm production capacity from vendors.
Overall, most chip categories are exhibiting an improvement in inventory. Semiconductor demand from consumer markets continues to deteriorate due to the weakening, easing shortages. There is a high chance of nonconsumer markets – including networking, servers, storage – following a similar trend in 2023, which will help further ease inventory imbalances and reduce pricing.
OEMs remain aggressive with inventory management, significantly reducing shelf inventory and increasing cautiousness with forward orders. Production forecasts have been reduced for various electronic equipment types, which is affecting chip unit shipments and pricing. Fluctuating chip prices have been the key influencing factor driving short-term changes to semiconductor revenue forecasts.
Given that Gartner projects the semiconductor inventory index to remain within the surplus zone through 2023, this will put pressure on chip pricing and lead to a slowing market. Gartner is forecasting total worldwide semiconductor revenue to decrease 6.5% in 2023 to $562.7 billion. The market is expected to recover in 2024, growing 16.3% to reach $654.3 billion in revenue .
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