The IC market in June

A Sales slump never seen before

5. August 2022, 9:11 Uhr | Heinz Arnold
Das durchschnittliche Wachstum pro Quartal in den Jahren 1984 bis 2021(links
Average growth per quarter from 1984 to 2021 (left). In the middle is plotted the average quarterly growth in years with an overall growth rate of more than 8 percent, and on the far right is the average quarterly growth in years with an overall growth rate of less than 8 percent.
© IC Insights

This June marked the first time since records began in 1976 that IC sales in a June slumped from May of the same year, according to IC Insights.

The market analysts drew on available data from WEMA, SIA and WSTS. Typically, the semiconductor market has regularly boasted high single-digit or even double-digit year-over-year growth in June. Even in 1985, the worst semiconductor year since 1976, June sales were up a modest 1 percent.

This year's sales slump is surprising for two reasons: first, the June quarter-end fell on a five-week month. The extra week in June would normally have been enough for growth over May. Second, June is usually one of the strongest months of the year. That's because OEMs buy the semiconductors that go into the systems offered in the pre-Christmas and year-end sales promotions during this month. 

The biggest contributor to the June 2022 sales crash was the sudden and deep drop in memory IC prices. In the second-quarter results, this plunge is not evident at leading manufacturers such as Samsung, SK Hynix, and Micron, as revenue gains in April and May offset the June decline. However, Micron is predicting a drop in sales of no less than 17 percent for its fourth quarter (ending August). Samsung and SK Hynix do not provide forecasts, but it is reasonable to assume they would be similar to Micron's, according to IC Insights. 

The second and third quarters of each year are historically the strongest. Since 1984, sales have grown an average of 2.4 percent in the second quarter and 6.1 percent in the third quarter. Depending on whether the industry is in an upswing or a downturn, the current numbers swing up or down from the average. 

In the second quarter of this year, sales were flat and fell below the long-term average. Based on IC Insights' analysis of companies' sales expectations, all indications are that sales in the third and fourth quarters will also fall short of average growth rates.  

Rising inflation and ongoing supply chain disruptions are to blame for the current weakness in the IC mart, he said. In addition, chipmakers and OEMs are busy reducing inventories. lnflation is taking purchasing power away from consumers. This is impacting the number of PCs, smartphones, televisions, game consoles and other electronic devices sold. 

Currently, IC Insights is revising its quarterly and its annual forecasts for 2022 and will publish the results at the end of the third quarter.  

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