As an agency that works with some of the leading companies within the technology industry, it is important that we stay up-to-date on the industry, including trends and the outlook of technology markets. So, we were excited to have the opportunity to share an extract of Future Horizons March report on the semiconductor market:

Executive Overview

IC ASPs continued to drive the recovery, up 34.7 percent vs. January 2023.  They were also up 7.6 percent vs. December 2023, which was untypical for the first month of the quarter.

At the same time, IC unit sales fell 13.9 percent vs. December 2023, again unusual for the first month of the quarter, and were also down 10.4 percent vs. January 2023.

With IC unit demand still in decline, the current furor over the supposed chip market ‘recovery’ needs to be treated with extreme caution bordering on the irrational.

Market Update

January saw IC ASPs rebound from December’s dramatic downward correction, continuing their now eight-month long recovery climb, up 7.6 percent vs. December 2023.

At the same time, IC unit shipments were 27.1 percent lower than the May 2022 8.2 billion maxed-out capacity peak and 16.4 percent lower than the overall long-term trend line, a marked deterioration over last month’s 3.9 percent number.

This is the first time since records began that ASPs have led a market recovery.  In the normal course of events, unit growth recovers first, with ASPs following ‘one-year later’.  There is no obvious underlying reason for this behaviour, quite the opposite, it flies in the face of fundamental economic supply and demand pricing theory.

Either it will prove to be a curious quirk of statistics or a fundamental, but as yet undetermined, radical shift in market behaviour.  Our bet is firmly on the former not the latter, especially given the overall global economic uncertainty.

Hopes that the US Federal Reserve would start dropping interest rates towards the end of March were dashed when the most recent inflation data rose at its fastest pace in almost a year, signaling a still bumpy road ahead against a robust labour market, strong growth and a resilient American consumer background.

So far, central banks have managed to successfully walk the fine line between pushing up interest rates to bring down inflation but not to the point of triggering a recession. The chances of a soft landing for the global economy are still strong but the overall economic outlook remains decidedly weak.

As one of the most respected semiconductor industry analysts across the globe, Future Horizons report provides some excellent insight into what’s currently happening in the semiconductor market. To find out how to access the full report, please click here. 

Future Horizons will be hosting a spring update webinar on May 7th 2024. For more information and to review previous webinars, click here.

For any further details, please reach out to the Future Horizons team.