Despite the US' decision to allocate massive funds for upgrading the country's network infrastructure, related IC design houses will still have to wait before business opportunities really arrive, according to industry sources. At present, the procurement markets in the US and Europe are still rather opaque as far as inventory correction and demand are concerned.
Procurement projects in various countries have provided a major support for MediaTek, Realtek and other network IC vendors amid weak demand in the consumer electronics market, the sources said.
But the US passing the budget for the network infrastructure upgrades does not mean that demand and orders will crop up overnight, the sources said. Uncertainty is still hanging over the markets in the US and Europe, and the procurement market in China may not see major order momentum until the fourth quarter of 2023, the sources said, adding that for MediaTek and Realtek, the pressure remains.
For network IC products, demand basically follows the seasonal pattern. But for infrastructure construction, demand comes from the procurement projects and there is no seasonality, the sources said, adding that IC suppliers are eager to expand to as many countries as possible for the procurement market.
But so far, telecom operators in major economies have yet to show clear demand, the sources said.
MediaTek and Realtek have previously noted that telecom operators were undergoing inventory correction in the first half of 2023, with demand for Wi-Fi, GPON and switch ICs declining significantly. Although there was some recovery in the second quarter of 2023, it was mainly replenishment demand from the consumer market.
Realtek has even given a pessimistic outlook for the procurement market in China. It said that switch IC demand from China's procurement market would hardly grow in 2023 because of geopolitical tensions.
Although some market observers have predicted that China's procurement market will release a wave of orders requiring upgraded specs by the end of 2023, network IC vendors will remain conservative until actual orders arrive, the sources said.
Article translated by Rodney Chan
