Global chip sales: Americas surged 11.4%, China fell 16.2%

The revenue outlook for Q4 2022 is generally bleak, especially for memory. Micron Technology's guidance is for the fourth quarter of 2022 to be down 36% from the third quarter of 2022. Micron plans to reduce its wafer operations by about 20%. Kioxia plans to reduce its wafer starts by about 30%. Samsung and SK Hynix did not give specific revenue guidance, but both cited weak demand and inventory adjustments as factors affecting revenue in the current quarter. Among non-memory companies, Qualcomm, Texas Instruments and MediaTek all expect double-digit revenue declines in the fourth quarter of 2022. Most companies blame weak overall demand and customer inventory adjustments on the bleak outlook.

Cars seem to be the only healthy part. Texas Instruments, STMicroelectronics, Infineon and NXP all said growth in the automotive industry had largely or partially offset declines in other industries. Of the ten companies providing guidance for the fourth quarter of 2022, only Nvidia (+1.2%) and STMicroelectronics (+1.8%) expect revenue to increase. The weighted average revenue change for the nine non-memory companies providing guidance is a 9% decline in Q4 2022 from Q3 2022.

Weakness in key end markets such as PCs and smartphones is evident from IDC's forecast for shipments in the third quarter of 2022. PC sales were down 15% from a year ago, and smartphone sales were down 9.7%. Before third-quarter 2022 data becomes available, IDC expects PC shipments to decline 12.8% and smartphone shipments to decline 6.5% in 2022.

Based on the latest shipment data, we at Semiconductor Intelligence now predict that PC shipments will decline by 15% and smartphone shipments by 10% in 2022.

Given the 6.3% semiconductor market decline in Q3 2022 and the bleak outlook for Q4 2022, only forecasts made after the release of WSTS data for Q3 2022 are relevant. The Cowan LRA model forecast for November 2022 is 8.1%, IC Insights is 3%, and our Semiconductor Intelligence is 1.5%.

The semiconductor market will definitely decline in 2023. IC Insights expects a 6% decline, and we at Semiconductor Intelligence expect a 14% decline. Interestingly, back in August, Future Horizons predicted a 22% decline in 2023. The WSTS committee met last week to discuss its fall forecast, which should be released within the next two weeks. It will be interesting to see how much it changes from WSTS's August update forecasts of 13.9% growth in 2023 and 4.6% growth in 2023.

Our Semiconductor Intelligence predicts a 14% decline in 2023, which would be the largest decline in the semiconductor market since a 32% decline in 2001, 21 years ago. Over the past 50 years, the market has experienced double-digit declines in only three years: 1975, 1985 and 2001. Our forecast for 2023 is based on the following assumptions:

• No global recession in 2022 or 2023

• Inventory corrections will resolve over the next two to three quarters

• – PCs and smartphones to return to pre-pandemic trends by mid-2023

If any of the above assumptions fail to materialize, the semiconductor downturn could continue through the entire quarter of 2023 and result in annual declines of more than 20%.