2019 is a dangerous and treacherous year for the global semiconductor industry. In the first half of the year, there was too much inventory, declining demand, and the impact of the trade war between the United States, China, Japan and South Korea. With the arrival of 5G and AI applications, China will beautify and accelerate 5G is released and gradually stabilized in the second half of the year. Looking forward to the global semiconductor boom in 2020, the International Semiconductor Industry Association estimates that the semiconductor boom will recover and the semiconductor market will grow by 5% to 8% in 2020.
Zeng Ruiyu, director of industry analysis at SEMI, said that the demand for semiconductors in the first half of 2019 was much lower than that of the same period last year, mainly due to the lower capital expenditures of cloud computing companies. The top eight cloud computing companies Amazon, Apple, Facebook, Google, Microsoft, Alibaba, Baidu, Tencent saw a 10% year-on-year decrease in capital spending in the first half of the year, compared with a 15% decline in the second half of last year. The decline in cloud computing capital spending was the cause of weak memory and other demand.
SEMI believes that there are three major reasons for the headwinds in the semiconductor market this year. First, the market inventory is too high. Second, demand is weaker than last year. Third, the trade disputes between the United States, China, Japan and South Korea. In terms of inventory, although the semiconductor market inventory declined from the peak in July this year, it was still 3 to 4% higher than the same period last year. Although the industry has long expected that there will be excessive inventory problems this year, the use of fabs in the first half of the year is still high. The rate adjustment is not enough, so the destocking will continue until the end of this year, and will not return to the seasonal average until early next year. Among them, the memory market has the highest inventory level, and it is still in the stage of destocking in the second half of the year.
In terms of terminal demand, apart from the fact that data center and cloud computing demand is not as good as last year, there are still risks in the sales momentum of smartphones. Zeng Ruiyu said that in terms of terminal application demand, there is still a risk of poor sales momentum in the high-end smartphone market. For example, the shipments of Apple’s new iPhone, which has just been launched, will not be higher than the same period last year. In addition, Huawei is still on the list of entities prohibited from exporting to the United States, and the purchase volume of US chip factories will become more conservative. Although for some supply chains, Huawei’s de-beautification will have the effect of transferring orders, but overall there is still a downside risk. .
The PC supply chain experienced poor demand in the first half of the year, mainly due to the shortage of Intel processors. With the increase in the supply of processors, the PC market is expected to recover quarter by quarter in the second half of the year. Furthermore, the demand for chips for automobiles and industries is not particularly strong this year. The main reason is that the sales volume of the world’s largest Chinese auto market from January to August decreased by 11% compared with the same period last year. As for the changes in the international environment such as the trade war and the trade dispute between Japan and South Korea, the demand for the semiconductor market has also been suppressed.
The investment in the front-end fabs is expected to be weaker than before in 2020. The original expectation of double-digit growth was revised to about 7% to 8% growth. In terms of regions, Taiwan has experienced substantial growth this year, and is expected to be flat or slightly down next year, mainly in the memory sector; South Korea’s investment will be flat next year. Investment in mainland China has declined this year, but it is expected to resume growth next year, driven by local and foreign investment.
Zeng Ruiyu said that the semiconductor market demand will gradually recover in the second half of the year. For example, server inventory has returned to normal levels and demand has recovered. DRAM and NAND Flash sales have entered a peak season. However, market research agencies predict that the semiconductor market will still decline significantly in 2019 compared with last year. 10%, there will be a recovery next year, but there are many variables in the overall environment, and there is still downward pressure on memory prices, so the growth rate is expected to be between 5% and 7%.
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