[Market Conditions Report.pdf] Market demand is weak. Apart from the boost from AI computing power, what other opportunities are there in the future?

How is the progress of destocking? How will the semiconductor market perform in 2024 as it moves toward recovery?

As we are about to enter the second half of the year, although WSTS has once again raised its growth forecast for the semiconductor industry in 2024, reflecting the strong performance of the semiconductor industry in the past two quarters, from the perspective of specific product categories, the products that will be positively affected will still be very limited.

While sharing the market recovery and development situation of mainstream research institutions in 2024, Future Electronics released the latest market situation report, analyzing the delivery trends of 10 major categories of semiconductors and components from the perspectives of product prices and delivery trends. Help global customers to deeply grasp the latest changes in component delivery. You can download the latest version of "Full Electronics Market Report" (updated on May 31) through the prompt at the end of the article .

At the same time, the Future Electronics product expert team will hold a live sharing session on "Full Chip Dynamics" on July 10 , deeply interpreting the Q3 component market situation, supply and demand forecasts, and trend analysis to help you quickly grasp the latest market pulse . Future Electronics' automotive division will also make a special sharing on new opportunities and challenges in the automotive electronics market . Welcome to make an appointment for the live broadcast.

Below, we share with you the latest industry outlook from mainstream institutions:

The China Federation of Logistics and Purchasing and the National Bureau of Statistics Service Industry Survey Center announced today (31st) the China Purchasing Managers Index for May. The China Manufacturing Purchasing Managers Index for May was 49.5%, down 0.9 percentage points from the previous month.

In May, domestic and foreign market demands were relatively weak. The new order index and new export order index were 49.6% and 48.3% respectively, both falling back to the contraction range. The enterprise survey showed that the proportion of manufacturing enterprises reflecting insufficient market demand was 60.6%, up 1.2 percentage points from the previous month.

Judging from the companies' expectations for the future market, the production and operation activity expectation index was 54.3% in May. It has remained at a high operating level of 54% and above since the beginning of this year, and the manufacturing companies' expectations for market development are generally stable.

Compared with the previous forecast six months ago, the World Semiconductor Trade Statistics (WSTS) raised its forecast for the semiconductor market size in 2024 from $588.364 billion to $611.231 billion in its latest report, an increase of about 4%. WSTS also revised its analysis of the semiconductor market size in 2023 to $526.885 billion. This means that the size of the semiconductor market in 2024 will increase by 16.0% year-on-year.

WSTS said the 4% increase in the forecast reflects the strong performance of the semiconductor industry in the past two quarters, especially the significant recovery in the computing terminal market.

From a category perspective, the 16% year-on-year growth will be mainly driven by the fields of memory semiconductors and logic semiconductors . Among them, memory chips have gradually emerged from the industry trough in 2023, product prices have continued to rise, and the operating rate of upstream original factories has also recovered to a certain extent, which will drive this part of the market size to achieve a huge year-on-year increase of 76.8%. In terms of logic semiconductors, benefiting from the continued demand for AI computing chips, the relevant market size will also increase by 10.7% compared with last year.

At the same time, the market size of discrete devices, optoelectronics, sensors and analog semiconductors will shrink by single-digit percentages.

DIGITIMES Asia reported that according to sources from analog IC suppliers, inventory adjustments for analog chips have been completed, and shipments to specific customers and product lines have resumed their upward trend. In addition to the normalization of inventory levels in the consumer market, supply chain inventory destocking in application markets such as automobiles and industrial control has entered the final stage.

Taiwan IC design companies believe that although the overall demand for analog integrated circuits remains sluggish, inventory levels have generally returned to normal. Shipments are expected to return to the normal cycle, with more significant growth in the traditional peak season in the second half of 2024. Of course, the end of inventory adjustments does not mean that subsequent demand will be strong.

Taiwan's power management IC (PMIC) maker said whether actual demand will increase this year will depend on the traditional peak season in the second half of 2024 and also on customers' willingness to introduce high-standard new products.

If the momentum of new product introduction is insufficient, it will be difficult to achieve significant growth this year. However, based on the current market situation, the growth momentum of high-end consumer electronics products may exceed that of entry-level and mid-range products. The shipment momentum of new high-end products with high unit prices may further expand this year.

According to TrendForce's observations, MLCC shipments in the first quarter of 2024 are expected to hit the bottom in the past three quarters. In the second quarter, except for the steady growth in demand for AI servers, the performance of other consumer electronics orders in ODMs will not meet expectations due to low demand for traditional seasonal bidding projects and insufficient stocking momentum for China's May Day holiday and the 618 e-commerce festival.

Overall, thanks to the support of order demand from AI servers and the fact that demand for ICT products did not see high growth due to holiday stocking, but still maintained a low growth compared to the first quarter, the capacity utilization rate gradually stabilized. Therefore, it is estimated that MLCC shipments in the second quarter will increase by 6.8% quarter-on-quarter to 123.45 billion pieces, which will also drive a slight increase in revenue in the second quarter.

Industry research firm Bishop & Associates Inc. said in its latest report that it saw an improvement in connector demand, with new orders up 8.4% and sales up 3.7% so far this year.

As of now in 2024, the industry has an order backlog of about 13.2 weeks. The Book to Bill ratio in April was 1.02. For most of 2023, the Book to Bill ratio was below 1.0. It was not until January 2024 that the trend reversed. According to the report, in the first few months of 2024, the Book to Bill ratio was 1.0 or above every month, which also confirmed the trend of improving connector demand.

In response, Bishop & Associates Inc. also raised its connector forecast for 2024 from +4.2% to +5.8%.

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For more information on component price and delivery trends, you can download the latest version of "Fullchang Electronics Market Report" (updated on May 31) at the end of the article.

At the same time, the Future Electronics product expert team will hold a "Full Chip Dynamics" live sharing session on July 10 , deeply interpreting the Q3 component market situation, supply and demand forecasts, and trend analysis to help you quickly grasp the latest market pulse. Make an appointment for the next live broadcast now.