Semiconductor market to be hit by fresh wave of rising component costs
, and said its figures indicated that it reached a plateau in the first quarter of 2022 following five straight quarters of record revenues and continual growth in demand.needed to manufacture chips would cause shortages to extend through until early 2023, although it still predicted a good year for chipmaker revenues.the semiconductor industry is facing an inventory correction
in the second half of this year or early 2023, thanks to steep inflation, signs of end-user demand slowing in areas including PCs, and companies stockpiling components to offset what has been a fluctuating supply situation. Meanwhile, memory chipmaker Micron also cast a cautious note in its most recent quarterly results announcement. The company reported its highest ever revenues, but warned investors that it wasThis kind of boom and bust cycle where manufacturers ramp up production in response to a peak in demand, leading to an oversupply situation where prices fall, is not unknown in the semiconductor market, especially in memory chips.
Earlier this year, Gartner vice president for semiconductors and electronics Richard Gordon warned of exactly this, saying that we had"We've just seen a classic peak in the semiconductor market – chip shortages, prices rises, inventory build-up, all of which led to a very high growth year and record revenues in 2021. But, this is a cyclical market.
"The bottom line is that the industry is heading in to a down cycle, probably starting in 2H22 but certainly affecting 2023 and 2024 – this means that the industry will move from undersupply to oversupply, which will put downward pressure on semiconductor pricing and result in a slowdown in revenue growth. The next up-cycle will begin in 2025 / 2026," he predicted. ®
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