The semiconductor boom is over, that much is clear, and TrendForce forecasts point to a sizeable drop that would have seemed impossible just a few months ago. To better understand the graph that we are going to see below, we must take into account four very simple things that will give us a very valuable context:
- The demand for semiconductors has fallen significantly.
- This drop is mainly due to a drop in demand in the technology sector.
- A significant accumulation of stock has been confirmed in different sectors, such as DRAM and NAND Flash memory.
- The high demand for semiconductors registered between 2020 and 2022 had an anomalous origin, since it was mainly motivated by the COVID-19 pandemic.
We are right now in a period of correction that has driven virtually the entire tech sector into a sharp downward trend, something normal taking into account those four points that we have given you. As expected, semiconductor factories are not going to be spared from that drop, and according to TrendForce forecasts their revenue will drop in 2023. It will not be a huge drop, but it will be considerable if we take into account the results of previous years.
In 2019, there was a 1.9% drop in revenue from the semiconductor sector compared to the previous year. However, in 2020, the date the pandemic began, sector revenue increased by 24%. The difference was huge, and in 2021 we see another huge rally take place again, with 26.1% year-over-year growth. The sector was able to keep its foot on the accelerator for another year, since in 2022 it closed with revenue growth of 28.1% compared to the previous year.
If we do the numbers we will realize that, in the end, the semiconductor sector increased its revenue by 78.2% in just three years. That continued growth will come to an end in 2023, a year that will mark an estimated 4% drop in revenue. As I said at the beginning, it’s not a big drop, but the important thing about this data is not the quantity but the reality it representsand it is that the demand for semiconductors is falling, and that in the end the sector has to face a period of correction that could last longer than initially expected.
