Semiconductor Industry Sees Strong Recovery in 2024

The global semiconductor manufacturing industry is showing signs of a robust recovery, as highlighted by the Semiconductor Manufacturing Monitor (SMM) report for the fourth quarter of 2023 released by Semi. After a challenging period, both electronics and IC sales have begun to climb, indicating a positive trend for the industry in 2024.

In 4Q2023, electronics sales saw a modest 1% year-on-year (y-o-y) increase, marking the first annual rise since the latter half of 2022. Projections for 1Q2024 suggest continued growth with a 3% y-o-y uptick. Similarly, IC sales witnessed a significant 10% y-o-y jump in 4Q2023, driven by improving demand and the normalization of inventories. Forecasts indicate even stronger performance in 1Q2024, with an 18% y-o-y growth expected.

The report also highlights positive trends in capital expenditure (capex) and fab utilization rates. After notable declines in the latter half of 2023, a mild recovery is anticipated in 1Q2024. Memory capex is projected to increase by 9% quarter-on-quarter and 10% y-o-y, while non-memory capex is set to rise by 16% during the quarter, albeit at lower levels compared to 1Q2023. Fab utilization rates showed a modest improvement from 66% in 4Q2023 to 70% in 1Q2024, indicating a gradual uptick in manufacturing activity.

Furthermore, the semiconductor equipment billings in 2023 exceeded expectations, although growth in the first half of 2024 is expected to be subdued primarily due to seasonal factors. Clark Tseng, Semi's senior director of market intelligence, expressed optimism regarding the industry's recovery, anticipating improvements in fab utilization as 2024 progresses.

Boris Metodiev, director of market analysis at TechInsights, echoed this sentiment, noting that semiconductor demand is steadily recovering. He highlighted the impact of emerging technologies such as AI, which is driving demand for leading-edge semiconductors, while geopolitical factors are contributing to excess capacity at the trailing edge.

In summary, the semiconductor manufacturing industry is poised for growth in 2024, fueled by increasing demand for electronics and ICs, as well as anticipated improvements in fab utilization and capital expenditure.