After an extended period of severe microchip shortages and while the world watches the level that can be reached in the wake of the visit of the president of the US Congress, Nancy Pelosi, to Taiwan – one of the main chip manufacturers – the growth of Global semiconductor sales have been slowing for six consecutive months.
In recent years, microchips have become increasingly important as essential elements in the manufacture of electric cars, mobile phones and other devices. An importance that was further increased as a result of the pandemic -with consumers allocating the money saved during confinement to the purchase of goods- and the implementation by governments of the transition to a zero-emissions economy.
Despite this, sales growth is slowing. One of the main causes is the decrease in consumer demand due to the current inflationary scenario and economic uncertainty. Another reason is the slowdown in the economy in China as a result of its Zero-Covid policy.
As a result, the production of semiconductors by two of the big players in the sector – South Korea and Taiwan – also show signs of slowing down. In the case of South Korea, the growth of exports from the world’s largest memory chip producer fell in July to 2.1% from 10.7% the previous month, marking the fourth consecutive month of slowdown.
For its part, manufacturing in Taiwan contracted in June and July, at the same time that production and demand plummeted. New export orders are those that experienced the greatest drop, according to Bloomberg.
For all these reasons, Evercore ISI analysts have modified their revenue forecast for semiconductors in 2022. While they previously expected it to be around 17%, they now expect an increase of 11%. Looking ahead to 2023, they believe it will fall 5% from the $615 billion base they have calculated for this year.
Tensions do not stop investment in China
It should be noted that the escalation of tension between China and the US does not seem to be having a negative effect on investor interest in Chinese semiconductor manufacturers. What’s more, the share price of the largest Chinese companies in the sector rose 7% on Friday, marking the biggest rise since 2020. By contrast, .
This growing interest is due to the fact that investors believe that this confrontation can stimulate the advancement of the microchip sector in the Asian country, according to Fortune.
Since 2015, China has invested billions to bolster its chip manufacturing capacity and reach 70% self-sufficiency by 2025. At the moment, the country continues to import more than $300 billion worth of semiconductors a year.
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