Penn predicts semiconductor market slowdown is coming
First the good news, Malcolm Penn, is forecasting the global semiconductor market will grow 10 % to $609 billion in 2022.
Cue the ominous music.
He is also predicting a downturn is on its way.
Penn has been around the block a few times in the chip business, and he was foremost amongst semiconductor soothsayers in getting closest to last year’s 26 % upturn (he forecast 24 %) so his outlook demands attention.
“The 17th downturn will come, the only uncertainty is when,” says Penn. “The market is overheating and the road ahead is stony. Semiconductor manufacturing capex is looks likely to be up 75 % in the second half of 2021, following a 56 % jump in the first half of the year. Once supply catches up demand the chip market will implode.”
Average selling prices (ASPs) which have been flying since the middle of last year may also come a cropper.
“Enjoy it while it lasts,” remarks Penn. “Long term IC ASP growth is zero.”
Double ordering and inventory build is also skewing the market, and the economic outlook is not bright with inflation biting and China’s GDP growth falling along with retail sales in the US.
Penn dismisses the complacent argument that “it’s different this time” from those who latched on to the 26 % boom in 2021, pointing out that the industry hadn’t experienced shortages since the 2000 dotcom boom, and anyway a 26 % uptick wasn’t that big a deal, the market grew 32 % in 2021.
He breaks down his 2022 10 % growth forecast with 1 % growth in Q1, 1.5 % in Q2, 3.8 % in Q3 and then a 10 % slide in Q4 as supply catches up with demand.
Penn’s bear forecast is for a 4 % uptick in 2022, which would see the market slow by mid this year, and he adds, “when that capacity comes in the market will flip fast.”
His bullish forecast of a 14 % upswing would likely postpone the downturn until early 2023.