Mixed Results in Semiconductor Industry Sales

Sales of electronics products, ICs, and front-end manufacturing equipment are on the rise, according to SEMI. However, the market for back-end manufacturing equipment remains weak.

In the fourth quarter, electronics sales are forecasted to increase by 22% compared to the previous quarter, following a 7% rise in Q3. IC sales are also expected to rise by 4% sequentially after a 7% improvement in Q3 2023. This growth can be attributed to the improvement in end demand and the normalization of inventories.

Despite the positive trend in electronics and IC sales, semiconductor manufacturing indicators are still soft. Fab utilization rates and capital expenditures continue to decline in the second half of this year.

While non-memory capital expenditures are expected to outperform memory in 2023, even spending in the non-memory segments has started to weaken. Total capital expenditures in Q4 2023 are at similar levels to those seen in Q4 2020.

Although overall semiconductor capital equipment sales are declining in line with capital expenditures, the contraction in wafer fab equipment spending has been less severe than anticipated this year. Additionally, back-end equipment billings are projected to increase in Q4 2023.

"While semiconductor markets have experienced year-over-year declines for the past five quarters, we expect to see year-over-year growth return in the fourth quarter of 2023 as production cuts have made their way through the supply chain," says Boris Metodiev from TechInsights. He adds, "On the other hand, front-end equipment sales have been performing much better than the IC market, thanks to government incentives and the fulfillment of backlogs. This strength is expected to continue into next year."

"Despite low fab utilization rates and slowing capital expenditures in the second half of 2023, we anticipate back-end equipment billings to reach their lowest point in Q4 2023," says Clark Tseng from SEMI. He further states, "This will mark an important turnaround for the chip manufacturing industry, signaling a recovery from the downturn with building momentum in 2024."