The worldwide semiconductor manufacturing sector will recover in the fourth quarter of 2023, according to a report co-authored by SEMI and TechInsights, laying the groundwork for continued growth in 2024.
"While semiconductor markets have seen year-over-year declines the last five quarters, year-over-year growth is expected to return in the fourth quarter of 2023 as production cuts have worked their way through the supply chain," said Boris Metodiev, director of market analysis at TechInsights. "On the other hand, front-end equipment sales have been performing much better than the IC market, buoyed by government incentives and the filling of backlogs, strength expected to continue next year."
"Despite low fab utilization rates and slowing capital expenditures in the second half of 2023, we expect back-end equipment billings to bottom in Q4 2023," said Clark Tseng, senior director of market intelligence at SEMI. "This will mark an important turnaround for the chip manufacturing industry, signaling a recovery from the downturn with building momentum in 2024."
Electronic sales are expected to climb by 22% quarter over quarter in the fourth quarter, following a 7% increase in the third, according to the report. After increasing 7% in the third quarter, IC sales are expected to gain 4% sequentially as end demand rises and inventories stabilize.
Despite improvements in electronics and IC sales, semiconductor manufacturing indicators remain soft. Fab utilization rates and capital expenditures continue to decline in the second half of this year, according to the report. Overall, capex on non-memory is expected to outperform memory in 2023, but even spending in the non-memory segments has begun to weaken. Total capital expenditures in the fourth quarter of 2023 are hovering at the levels seen in the fourth quarter of 2020.
While overall semiconductor capital equipment sales are declining in line with capital expenditures, the contraction in wafer fab equipment spending has turned out to be much shallower than expected this year, according to the report. Furthermore, back-end equipment billings are projected to increase in the fourth quarter of 2023.