A new report by Gartner shows that the global semiconductor market is expected to decline by 11.2% in 2023, reaching $532 billion. This follows marginal growth of 0.2% from 2021, totaling $599.6 billion in 2022. The short-term outlook for the market appears bleak, with the PC, tablet, and smartphone semiconductor markets stagnating. These three markets will represent 31% of semiconductor revenue in 2023, totaling $167.6 billion.
The report by Gartner attributes the uncertain investment environment and weak end-market electronics demand to economic headwinds that continue to persist. The oversupply of chips is accelerating the decline of the semiconductor market this year, lowering chip prices and elevating inventories.
The memory industry is also dealing with overcapacity and excess inventory, which will continue to put significant pressure on average selling prices in 2023. The memory market is projected to decline by 35.5% to $92.3 billion in 2023 but will rebound with a 70% increase in 2024.
The DRAM market is projected to decline by 39.4% this year to reach $47.6 billion, experiencing significant oversupply despite flat-bit production by DRAM vendors. In 2024, the market will move to undersupply and DRAM revenue will increase by 86.8% as pricing rebounds.
The dynamics for the NAND market will be similar to the DRAM market, and as a result, NAND revenue is projected to decline 32.9% to $38.9 billion in 2023.
Gartner’s report notes that the high volume and high-dollar content market drivers of the past decades are coming to an end, particularly in the PC, tablet, and smartphone markets where technology innovation is lacking. In addition, COVID-19 and the US and China trade tensions have precipitated the deglobalization trend and the rise of techno-nationalism. Semiconductors are now considered a national security issue, according to Richard Gordon, Practice Vice President at Gartner.
The decline of the semiconductor market in 2023 is likely to have an impact on a wide range of industries, including consumer electronics, automotive, and telecommunications, among others.
