Taiwan-based IC design houses are generally bullish about their market prospects for the second half of 2024, notwithstanding the persistently unfavorable macroeconomic climate, according to industry sources.
Taiwanese IC design companies have recently held quarterly earnings conferences one after the other, indicating a better-than-expected 2024, sources said. Among all device applications, automotive electronics and consumer electronics related to the Internet of Things face relatively significant demand.
However, AI servers are not the only significant end-market applications, sources noted. While PCs and mobile phones have unexplored development potential, TV applications can benefit from demand generated by impending sporting events.
Sources continued that these growth prospects will be propelled primarily by high-end products, suggesting that the market for electronic devices is displaying two distinctly different scenarios.
The general economic situation hasn't improved, according to sources. Poor demand for automobile electronics and the persistently sluggish sales of various relatively inexpensive electronic devices attest to this. The purchasing budget has been constrained, as the mid-to-low-end product segments are relatively unimpressive even in the mobile phone and PC markets.
Customers continue to demand the newest products, nevertheless, sources indicated. As a result, those with bigger budgets will focus on buying products like AI PCs or mobile phones.
A few industry observers have already pointed out that in 2024, only AI-compatible devices would be more likely to deliver better sales results. Essentially, more applications will have to wait until the economy continues to improve. After that, there will be more noticeable growth.
If AI makes more advances in functionality by that time, it will be able to widen the scope of its debut and stimulate the sales expansion of additional apps, according to sources at fabless chipmakers. Before then, the growth of non-AI applications will most likely be driven by a gradual rebound from the off-peak season effect and a low base period in 2023.
In the past, introducing innovative devices made with state-of-the-art technology was common practice for clearing market obstacles for all electronic products. The most notable example is the smartphone revolution spearheaded by Apple's iPhone, sources indicated.
AI adoption may take longer to become widespread, sources said. Based on the ongoing advances and discussions surrounding the deployment of AI in mobile phones and PCs, two major consumer electronics categories, it is clear that AI's influence will spread to a broader variety of devices in many industries. It aggressively fosters the creation of new applications.
Key Taiwan-based IC design firms, including MediaTek, Realtek, and Elan, predict that the customary peak season in the second half of this year will outperform the first half, but it remains to be seen how high the upper limit of growth will be.
Furthermore, in the first half of 2024, all IC design companies have observed that customers' restocking attitude has exceeded their early projections. Many manufacturers exceeded their financial projections in the first quarter. The industry is eagerly anticipating the second half of 2024.
Article translated by Jessie Shen
