The semiconductor industry is nothing but two types of “normalcy”: one is that chip supply is in short supply, and the market situation is rising; The other type is chip overcapacity, which corresponds to a sluggish or slowing market. In the past two years, we have experienced multiple setbacks such as the impact of the epidemic, supply chain tension, and strategic competition between China and the United States. The semiconductor market has been weak, and the global chip market has shown a relatively declining trend. Until the end of this year, I was still deeply impressed by the pessimistic predictions of various well-known analytical institutions in early 2023.
The fact is indeed true. Last year, the revenue of the relevant company where my friend worked declined. During the chat, he expressed deep anxiety, fearing that he would also be suddenly laid off. At the beginning of 2023, many semiconductor companies saw a visible decrease in investment. Fortunately, with the gradual warming of the ice and rain, the storage chips performed well in the first half of the year (as evidenced by the continuous breaking of the monopoly of the three giants in the solid-state hard drives/memory modules of domestically produced chips by Changjiang Storage), and “AI computing power” turned the tide (ChatGPT made a surprise, high computing power cards were banned, etc.). In the middle of the year, there were frequent explosive points in the smartphone chip field, and both Huazi and Guozi made contributions (Huawei’s 5nm process Kirin 9000s 4.9999… G chips are particularly worth mentioning), The domestic trend of self-developed chips and the strong rise of domestic new energy vehicles have led to a rebound in the total output value of the semiconductor chip industry in the second half of 2023, reigniting hope.
According to a September report by well-known research firm Omdia, the total output value of the semiconductor industry reached 124.3 billion US dollars in Q2 2023, an increase of 3.8% compared to the previous month; The November report announced a total output value of 139 billion US dollars in Q3 2023, an increase of 8.4% compared to Q2. The continuous growth for two consecutive quarters means that the entire industry has successfully reversed its decline and achieved a “bottoming out rebound” after five consecutive quarters of revenue decline, and friends’ concerns about the industry’s prospects have largely disappeared.
The sustained recovery in these two quarters can be attributed to the following aspects:
Firstly, the global economic recovery has brought new development opportunities to the semiconductor chip industry. The steady recovery of economic activities in various countries/regions has also driven the steady growth of demand in the semiconductor market; The previous supply chain issues have been basically resolved, and the increase in production capacity has accelerated the industry’s recovery.
Other opportunities come from the application and development of emerging technologies such as AI, artificial intelligence, the Internet of Things, and cloud computing. The artificial intelligence power widely used in intelligent vehicles (assisted driving), whole house intelligence, and medical fields is very strong. The large model training behind AIGC applications has brought about an increase in demand for computing power chips, and the expansion speed of storage chips is also obvious. The upper limit of future chip development is relatively objective, injecting more confidence into the future development of the entire industry.
However, the entire semiconductor industry is still in a cyclical bottoming out state, and the competition intensity among enterprises is also at a high level, and more challenges will be faced; Overall, enterprises with strong technological innovation capabilities and the ability to continuously produce high-performance and high-quality products are more likely to establish a foothold. Who will forget the battle next year, we still need to walk and see.
