The semiconductor market continues to undergo a period of growth contraction influenced by geopolitical factors, post-COVID demand normalization and fluctuations, and a surplus of inventory in various commodities. Suppliers are navigating these challenges to ensure stability and competitiveness across multiple segments. The global semiconductor industry forecasts that in 2023, it will contract by 9.7% (including memory) but will return to a growth forecast of 11.7% in 2024.

• The Memory market anticipates some constraints in 2024 as bit growth is limited, with key suppliers cutting production to raise average selling prices (ASPs). DDR4/DDR5 pricing is expected to increase, with some constraints in supply. NAND Flash faces potential price increases, and NOR Flash tightness is expected through the first half of 2024.
• In the Discrete semiconductor market, overall lead times are recovering, with some exceptions to Power MOSFETs, which continue to see relatively more robust demand. Capacity expansions undertaken by major manufacturers have contributed to catching up with Demand. Infineon's acquisition of GaN Systems enhances its position in the Wide band gap space. 
• Standard Gate Logic sees a healthier supply landscape with decreasing lead times. Capacity utilization is lower than average, with continued new capacity planned for TI and Nexperia. Pricing is competitive, with suppliers adjusting to softening demand. Asian logic suppliers, such as Unisonic Technologies, SG Micro, and Wuxi ICORE, are entering the market with competitive pricing.
• In General Purpose Analog, companies still face simultaneous shortages and oversupply based on the different vendors and types of product mix. Overall, analog suppliers are eager to compete and gain market share as lead times from key analog vendors improve. TI, for example, has significantly more capacity and inventory to compete this year. Price changes are expected to be moderate, influenced by suppliers' willingness to negotiate.
• Optoelectronics supply remains normal, with some constraints from Japanese manufacturers. Lead times continue to decrease as an overall trend but remain conservative due to uncertainties. Price stability is observed, with suppliers maintaining current profit levels amidst a softer demand climate. 
• Global geopolitical challenges and market uncertainties are prompting semiconductor suppliers to diversify their supply chains. 
• Semiconductor vendors want to diversify manufacturing capacity across multiple geographic regions to respond to customers’ concerns around regulatory changes and geopolitical tensions. 
  • Examples of such actions include qualifying additional foundry partners in other geographical locations, approving a component to be built at multiple different fabs, and closely monitoring regulatory developments to ensure supply chain resilience.

SUPPLY

• The global semiconductor market outlook in 2024 looks better than the very slow 2023 outlook. Most companies are simultaneously facing challenges with both shortage and oversupply, and economic and geopolitical uncertainties. Rising interest rates, high inflation, lower consumer confidence, and tech-led stock market retreats have led to a dramatic loss in market capitalization.
• However, the semiconductor market is expected to pick up in the second half of 2024, with the correction of demand and supply, lead time improvement, and normalization of the inventory level and chip prices.
• Due to ever-changing policies and restrictions from countries throughout the globe, the Semiconductor landscape continues to evolve.
• Most of the suppliers’ lead times are back to pre-COVID levels except for certain golden screw devices.
• The automotive market will remain the primary revenue driver in 2024.
• Generally, the book-to-bill ratio is <0.7

Texas Instruments

• During their Q3 2023 earnings call, TI reported the revenue was flat sequentially and decreased 14% from the same quarter a year ago.
• Automotive growth continued, and industrial weakness broadened. The projection for Q4 is down almost 10%. With the market softening, TI has shown an eagerness and aggressiveness to compete and gain market share from their competitors, especially the new Asia Suppliers, who gained much of TI’s claim during the supply constraints. With the further CAPEX expansion on RFAB2/ LFAB, TI made some revolutionary changes in inventory management to support the future market ramp-up. Generally, most of their lead times have returned to normal, except for certain golden screw devices.
• LBC5, 6, 7, 8, 9 wafer processes remain critically constrained. Lead times have stretched to 35 weeks or more. (MPNs: TLCxx, TLVxx. TPSxx, DRVxx,ISOXXX ).

New Capacity investments announced in 2023

• Front End Fab:
  • Lehi Fab – Acquired from Micron. Advanced Analog and Embedded Processing –Operational back in Dec 2022
    • 65-nm nodes (F65/C021).
  • Lehi Fab2– Ready in 2026
    • Sherman Fab (Texas) – Ready 2025
      • Size of 4 RFAB2s
      • 300-mm

Monolithic Power Systems

• MPS lead times improved to 26 weeks for both standard and automotive products.

Microchip

Lead times for Standard Products and Custom products remain at 39 weeks.

Microchip offered additional flexibility for new orders under PSP as of 1 August.

• The existing PSP backlog remains unchanged.
• Rolling backlogs from nine months to six months.
• Microchip allows clients to split orders for a specific device between PSP and non-PSP.
• Microchip added flexibility to cancel or reschedule orders if the confirmation date exceeds six months and clients’ feedback within 10 days.

Onsemi (recent rebrand from ON Semiconductor)

• Std Analog: AC/DC, DC/DC, Interface (RS232, R485), VR, LDO, Driver, Mixed Signal/Amplifiers, and Comparators all quoted at 12~26 weeks lead time. Strong demand from the Automotive segment.
• Onsemi CW/RW will be improving to 60 days for IPS products - starting in mid-November.​
• LTSA  Program: Due to market softening, many customers want to revisit and discuss the long-term supply assurance program.

Renesas

With the current softening in the market, Renesas has improved the lead time of Analog and Power products to 18-24 weeks.

Diodes

Diodes expects a broad-based slowdown globally in the industrial market and softness in the automotive market due to customer inventory adjustments and year-end distribution inventory management.

Joint Venture with ATX: two phases

•  Phase I: existing 2,500m2 production space available for equipment consignment/qualification
•  Phase I: 19,500m2 (new four-story building in the open field of the same site)
•  A total of seven packages were identified
• SOT23/SOD323/SOT323/SOT363/SOT353/SOT563/SOD123

Work with Unisem Group Malaysia

• Phase I NOW
• Total three packages identified: SOT26/SO8/SOP8 – targeting for Q4 2024
• Covered products – Load Switch, DC-DC, CMOSLDO, etc.
• Phase II, starting in Q2 2024
•  Identified the following packages: SOT563/DFN2020-6/QFN4040
•  Covered products – DC-DC, CMOSLDO, etc.

Lead times have improved to 12-20 weeks.

ADI

ADI attributed their revenue declines due to customer inventory adjustments, economic slowdown, and supply chain challenges.

For the fourth quarter, ADI is forecasting revenue of USD 2.70 billion. ADI expected revenue changes to be moderate given the continued economic uncertainty and normalizing supply Chain.

Leadtime: 93% of Part < 13 week

ADI/MAXIM ERP Integration – Target Feb 2024

STM

Standard Linear Product Lead times improved to 16 ~24 weeks. All these standard product Cancellation/Reschedule windows have returned to a standard four-week window effective from 2024 onwards.

STM CAPEX expansion mainly focuses on internal wafer fabs, so Automotive MCU, SIC, analog, discrete, MOSFET and sensors. Most of their MCUs are still outsourced through TSMC’s eight-inch wafer fabs. STM’s larger internal fabs are Crolles 12 inches, Rousset, Agrate, Catania (SiC), and Singapore (SiC).

MARKET DYNAMICS

• Due to geopolitical influence, there is a divergence in the development of China-related and non-China-related supply chains.
• The artificial intelligence (AI) market is rapidly growing as the demand for AI chips will increase steadily. The major players in the market include Amazon, Google, Apple, Facebook, IBM, and Microsoft.
• PC, tablet, and smartphone semiconductor markets are stagnating.
• The Automotive semiconductor sector will continue to grow due to the semiconductor content per vehicle increasing in line with the transition to electric and autonomous vehicles.
• Vishay acquired the Newport, South Wales, U.K. wafer fab facility and operations of Nexperia. The acquisition of the Newport 200mm wafer fab will accelerate Vishay’s silicon carbide (SiC) production plans.​

PRICE

• As you are aware, the semiconductor market is entering into a major correction cycle as demand for PCs, smartphones, tablets, and consumer electronics has significantly declined.

• There is an excess supply of components in the market, and prices have stabilized/reduced as suppliers try to clear their inventory and compete for market share.

• There is a potential for distribution to sell off excess inventory to the open market and erode the market price to reduce inventory liabilities.

• For high-performance analog products, the price will remain flat, but most prices are tied to the end customer contract price.

  • Renesas: Flat

  • Onsemi:  Flat.

  • ADI: Flat

  • STM:  Flat

  • Diodes: Some decrease

  • TI: Some decreases

• Therefore, the semiconductor price trend for 2024 is likely to be relatively flat but will fluctuate depending on the market conditions.

SUPPLY

• The market continues trending towards a healthier supply landscape as demand slows. The lead times have been adjusting downwards for standard logic at six to 10 weeks.

• The supply trend has got better now, except for automotive grades. Automotive and AI have become the primary growth drivers; we expect this trend to continue through 2024.

• There is visibility to reduced backlog, prices returning to normal, and easing supply. Most Logic suppliers advised that lead times have stabilized due to downstream inventory adjustments. Global POS sales declined for the key Logic suppliers over the second half of 2023.

• Most Suppliers' capacity utilization is < 80%, with a book-to-bill ratio of < 1.0. Automotive and Industrial demands will continue to grow in 2024 but at a slower rate compared to 2023.

• Foundry utilization continues to fall in the second half of 2023. The OSAT Manufacturers are seeing an 80% ~ 90% capacity utilization rate. OSAT Manufacturers have seen significant revenue decreases from January to September 2023.

• The new capacity planned will gradually come online as we enter 2024 for TI and Nexperia.

• Texas Instruments has gone through significant optimization and technology transitions to newer nodes in the past six to eight quarters to improve capacity. This effort enhances resiliency in the supply chain and mitigates against future supply chain constraints.

• Texas Instruments has significant LT improvement except for Automotive devices. Texas Instruments - Logic six weeks.

• Nexperia advised six to eight weeks in general, chasing for more orders on Pico Gates Logic.

• ONSEMI issued PCNs amid a transfer of the standard logic portfolio manufactured in Tower to Vanguard Semiconductor (Taiwan); consolidation of backend manufacturing sites for similar packages for 90% of the logic portfolio except for the metal gates. ONSEMI is still seeing growth of low single digits for Industrial and Automotive, respectively; both segments are primary contributors of 80% to revenue and continue to be their key growth focus.

MARKET DYNAMICS

• Recent worldwide GDP growth forecasts for 2024 range from 2.1% to 2.9% (Bloomberg Consensus poll, OECD, IMF, Goldman Sachs, and SandP Global). This indicates much uncertainty looking into 2024.

• Wafer demands in 2024 are expected to be flat or decline slightly. Semiconductor manufacturing will see a leveling/settling into a new norm.

• Most semi-suppliers have gone through significant optimization and technology transitions to newer nodes in the past 6-8 quarters to improve capacity.

• The automotive segment will continue to record double-digit growth over the next three years as semiconductor content per vehicle will increase due to the transition to electric and autonomous vehicles.  Automotive and Industrial demands will continue to grow in 2024 but at a slower rate compared to 2023.

• The steep declines in Consumer, PC, and Smartphone demand are clear but do not expect an industry-wide oversupply of semiconductors as demand in automotive, industrial, and medical remains robust.

• Asian Logic suppliers (Unisonic Technologies, SG Micro, and Wuxi ICORE) are entering the logic supply landscape and offering competitive pricing.

PRICE

• Suppliers are more open to price reviews to gain share due to softening demand in most sectors, except for Automotive and Industrial.

• Nexperia is going aggressive on price to win more shares due to declining demand.

• TI is not predicting significant change in pricing; they are entering a more balanced supply and demand situation, but they also want to remain competitive to protect market share.

• Nexperia and TI have seen declining orders and lower inventory, which aligns with the market. Both are willing to reduce to maintain and grow market share.

• ONSEMI stays flat on pricing and believes that the LTSA (Long Term Support Agreement) is holding firm for supply/demand on Logic. ONSEMI is still seeing 8% and 10% growth for Industrial and Automotive, respectively; both segments are primary contributors to 80% of revenue and continue to be a key growth focus. ONSEMI changed the wafer supply from Tower to Vanguard Taiwan for 90% of the Logic family. Many MPNs are on a Last Time Buy of 20th Nov 2023 and associated PCNs.

SUPPLY

• Overall market lead time is recovering for most of the product range except for Automotive MOSFET, High Voltage MOSFET, and IGBT. The risk of supply disruption in 2024 is low due to the gradual recovery in demand expected in 2024 and capacity expansion for discrete products by most manufacturers, which continues in view of high potential over the next five years.

• Average lead time based on technology:

  • General Diodes: 12 -14 weeks

  • Switching Diode: 15 weeks

  • Schottky Barrier Diode: 12 – 16 weeks

  • ESD and TVS:12 - 16 weeks

  • Zener Diode:8 – 14  weeks

  • BJT Transistor: 40  weeks

  • Low voltage MOSFET: 24-30 weeks

  • High voltage MOSFET: 45 weeks

  • Sic: 39 – 40 weeks

  • Automotive MOSFET: 43 weeks (allocation)

• Continuous expansion in capacity has led to supply normalization for Infineon products. Infineon completed the acquisition of GaN Systems Inc., and this means that Infineon is now becoming a leading powerhouse in GaN with over 450 GaN experts and more than 350 GaN patent families.

Front End:

• Given the undisputed leadership position in the power system, Infineon added additional investment on SiC for the third phase of their Kulim plant, which will expand capacity to 15X more capacity compared to 2023. 3rd phase is targeted for Mass Production in 2027.

Backend:

• The expansion of their backend manufacturing capacity in Batam (Indonesia), mainly for automotive power IC, is expected to be ready for production in 2024. Onsemi’s overall price trend remains flat while lead time is improving significantly, with only 4% of parts remaining as “black” classified parts (very constrained). With the market demand being very volatile, Onsemi has renegotiated with some OEMs on the LTSA program to allow adjustments on manufacturing the correct mix of products to suit the cluster of LTSA customers.

• Onsemi managed to complete the expansion of its Bucheon, South Korea fab for SiC, and this fab can manufacture more than 1 million pcs of SiC wafers per year at full capacity.

• Front End:
  • EFK (12-inch) multi-year expansion underway, including Mosfet Trench and IGBT for modules and Analog BCD
  • BK6 (6-inch) expanding SiC Epi and wafer capacity
  • CZ4 6-inch, 8-inch) FRD rectifier transfer and expansion from BK8 and Bare K6 underway.
• Backend Assembly:
  • Expansion of 50K sq ft assembly and test capacity per year
  • Expansion of Power discrete and module multi-source capabilities

Nexperia non-automotive part supply is back to normal. Due to the new capacity, the Automotive Mosfet (BUK series) will see improvements from February 2024 onward. Newport (UK) is sold to Vishay due to UK government instruction for divestment (a Chinese entity that owns Nepxeria).

Front End:

• Wafer fab in Hamburg (Germany) and Manchester – Ongoing conversion from 6 to 8 inches.
• Nexperia also continues negotiating and adding external foundries for increased wafer capacity.
•  A new 300mm (12-inch) wafer fab in Lingang (Shanghai) is scheduled to go online in the middle of 2024.

Backend Assembly:

• Expanding their Dongguan (China) factory
• Investing extra capacity in Cabuyao (Philippines) and Seremban (Malaysia)
• Implementation of advanced automation

MARKET DYNAMICS

• Newport, South Wales, U.K., sold by Nexperia to Vishay for USD 177 million in cash due to a divestment order by the UK government. Newport fab, located on 28 acres of land, is an automotive-certified, 200mm wafer fab that would complement Vishay’s lack of short-term capacity expansion on their automotive MOSFET products.
• Nexperia partnered strategically with Mitsubishi Electric Corporation to develop (SiC) MOSFETs jointly.
• Referring to Counterpoint data, the overall global smartphone shipment quantity is still -1% YoY in Q3 2023; however, gradual demand recovery led by the emerging market, particularly the Middle East and Africa, gives some hope to smartphone demand.
• Five consecutive increases in China’s PMI to 50.7 in October 2023 show that the global manufacturing powerhouse is on the right track to gradual recovery after addressing the drop in demand and inventory issues. More monitoring is required before we can say it is a definite market recovery, as the improved demand is largely affected by factors such as federal reserve interest rate, military conflicts, price of fuel, etc. 

PRICE

• Price trends remain stable, and suppliers are more flexible in moving the price of the products to the right level.

• However, this is mainly on a case-by-case basis as some of Discrete commodities are still in constrained status and at higher quoted costs due to high material, energy, and workforce cost that prevents the price from going down to the pre-COVID level.

SUPPLY

• The supply is normal from most manufacturers of Optocouplers, InfraRed (IR) devices, and optical sensors. Japanese manufacturers face constraints on Optocoupler and solid state-related SSR products from Toshiba and Panasonic. Some SSR products from Panasonic are now in allocation mode for automotive applications. 

• Demand for automotive has slowed, but the supply has still not caught up, which has caused the allocation.

• Global-brand company lead time continues to drop significantly due to market softening. They remain at the 15-28 weeks level, while the Asian brands quote eight to 16 weeks. 

• Onsemi lead times have dropped from a high level, but they have not revised the cancellation window, which caused most products to be quoted as non-cancelable, non-returnable (NCNR).

• Most manufacturers are conservative on the cancellation policy as they still face numerous customer pushouts or cancellations. 

• Opto suppliers see capacity utilization rates lower than 80%, and the business has generally dropped from 30% to 50%. 

• Single-source semi-customized LED manufacturers, such as Visual Communications, Panasonic, Nichia, Dialight, Vishay, and Kingbright, have been announcing the end-of-life (EOL) of their legacy products. Customers are advised to work closely with us to qualify Jabil’s preferred suppliers to mitigate supply risks.

• Most LED suppliers are chasing business, especially in growing sectors such as energy EV transformation, Healthcare, and enterprise infrastructure.  Consumer market demand has become stable at a comparatively low level.

MARKET DYNAMICS

• Most suppliers, especially the top-tier brands, are focusing on developing the Automotive / EV market. Asian suppliers are expanding new business areas to fill factories and maintain the company's competitiveness. Small companies and non-automotive suppliers will face a greater challenge in the next few quarters if the economy drops into a recession.

• Customers are starting to quote non-China sources. Suppliers are considering factory moves, but no real action has been taken as the market has slowed down. They are all holding the investment of new overseas facilities – actions may have to be taken quickly if the U.S. applies tougher restrictions on Chinese manufacturing locations.

PRICE

• Prices are stable for all product types in Q4 2023 and into 2024. Suppliers are keeping price levels flat through the end of the year. They are not increasing prices significantly, even if material cost increases impact them – most suppliers are in a reactive mode to maintain the price level to keep market share.  
• Price increases on EOL/legacy products and selected Circuit Board Indicators (CBI), light pipes, and optocouplers due to rising costs of raw materials are still common.
• Suppliers are open to reviewing the price for new opportunities and demand. Cost-down opportunities are available for new and future projects.
• Automotive and Healthcare sector growth is stable. There is keen competition on new project bidding to secure 2024 business. The consumer market is expected to pick up in 2024, so prices are steady as suppliers deplete inventory and look forward to the bounce back next year.

SUPPLY

• DDR4/DDR5: Some Constraints.
• DDR3: There are a few constraints but some available production options.
• Legacy (SDRAM, DDR1,2): Stable (Look to second-tier suppliers for support)

MARKET DYNAMICS

• Alert: The Cyberspace Administration of China (CAC) has excluded using Micron Products for Critical Information Infrastructure in China. CAC is notifying Critical Infrastructure companies directly.  Follow Jabil's alerts as more information becomes available.
• Analysts predict market stabilization in 2024 with limited bit growth. Still, the use of artificial intelligence (AI) and 5G is gradually increasing, but uncertainty remains in the market, and factories are now reporting lower lead times and availability of products.
• Demand is lower than the production rate in Q4’23/Q1’24. Lead times are normalizing.
• Major suppliers are downgrading growth predictions for the first half of 2024. 
• Suppliers are reporting capacity in DDR3. Look for support from most suppliers as deals can be made.
• DDR4/DDR5 pricing will increase yearly as suppliers move to profitability. 
• PC and server demand continues normalizing, and handset demand has increased. 
•  Look for and take advantage of Short-Term SPOT-Market lower pricing and over-supply opportunities.

PRICE

• DDR4/DDR5: Some Increases.
• DDR3: Some Decreases.
• Legacy (SDRAM, DDR1,2): Some Decreases

SUPPLY

• Asynchronous :

  • Low Power: Stable

  • Fast SRAM: Stable

  • Slow SRAM: Stable

• Synchronous:

  • Quad Data Rate: Stable

MARKET DYNAMICS

• A stable demand and supply base still exists in the market place today.
• Balanced market conditions are expected to continue throughout 2024. 
• Expect lead times to stay extended due to increased orders from suppliers.
• Look to second-tier suppliers to help with first-tier constrained suppliers.

PRICE

• Asynchronous: Stable
• Synchronous: Stable

SUPPLY

• Planar NAND: Some Constraints
• 3D NAND Flash: Some Constraints

MARKET DYNAMICS

• ALERT: The Cyberspace Administration of China (CAC) has excluded using Micron Products for Critical Information Infrastructure in China. CAC is notifying Critical Infrastructure companies directly.  Follow Jabil Alerts as more information becomes available.
• Expect price increases in Nand Flash products and related products using Nand Flash (eMMC and SSDs) as suppliers try to return to profitability. Continue to forecast effectively. Take advantage of over-supply pricing and Spot Market pricing where applicable.
• As major suppliers try to push pricing higher on high-density Flash and High-Density SSD. Push back or involve GCM for help. Look for second-tier suppliers for support if possible.
• The Ukraine/Russia conflict is reportedly not likely to cause further impact on Flash production or pricing, but customers need to be kept aware should consequences arise.
• Short-term demand looks to increase in 2024, and pricing reflects this. Pricing will stay higher for the second half of 2024 for supply/demand. Give suppliers as many forecasts and hard orders as possible to ensure supply.

PRICE

• Planar NAND: Increasing
• 3D NAND Flash: Increasing

SUPPLY

• Low-Mid Density NOR:  Some Constrained
• High Density NOR: Some Constraints

MARKET DYNAMICS

• ALERT. China’s CAC has excluded using Micron Products for Critical Information Infrastructure in China.  Follow SCM updates.
• NOR Flash memory is anticipated to remain tight through the first half of 2024.
• The rising popularity of true wireless products and increasing demand for NOR Flash memory will continue through 2024.  Coupled with 5G product introductions, it could make supply tight.  Keep aware of market issues.
• NOR Flash Foundry partners are also seeing increased demand from non-Memory products that yield higher margins, and this will limit capacity expansion plans for NOR Flash.
• The Ukraine/Russia conflict will not likely cause material shortages, but customers must be vigilant. 
• Look for second-tier suppliers for support. GCM can help with alternatives.

PRICE

• Low-Mid Density NOR: Flat
• High Density NOR: Flat

SUPPLY

• EEPROM: Stable.

MARKET DYNAMICS

• EEPROM is a mature memory technology.
• A stable demand and supply base supports the marketplace today.
• Balanced market conditions are expected to continue into 2024.
• Make sure to monitor lead times and give ample forecasts.
• As major suppliers continue to extend lead times and have capacity constraints, look to second tier suppliers for support.

PRICE

• EEPROM: Stable.

SUPPLY

• Stable/ Some Constraints.

MARKET DYNAMICS

• ALERT: The Cyberspace Administration of China (CAC) has excluded using Micron Products for Critical Information Infrastructure in China. Follow SCM updates.

• SSD growth for 2024 in Automotive applications is expected to outperform in previous years.

• Growth in Half Height, Half Length (HHHL) will also increase in 2024. These form factors provide better performance.

• PCle SSDs offer higher performance and reduced latency.

• The demand for SSDs in the emerging cloud platforms has rapidly increased.

• Presently, SSD costs are still higher than HDD and 3D Nand Flash costs are increasing in 2024, but they are still considered the better option for design.

• Look at second tier suppliers looking for options when major suppliers push back. 

PRICE

• Increasing through 2024.

SUPPLY

• Lead times drop slightly below 30 weeks in some categories.  The market keeps moving except for the automotive and healthcare segments.   
• Old technology and products are also stable as the market demand stays low even with no capacity investment in equipment for legacy products. It is time to renew and phase out the old design. The situation may remain for 2024. 
• Top-tier global suppliers like Texas, Onsemi, Maxim, etc., are stable and aggressive in gaining new projects to secure 2024 demand. The demand growth in 2024 should be covered by the supply in place today.
• Sensor manufacturing does not rely heavily on China manufacturing facilities. We still recommend diversifying and being multi-sourced to avoid any political/natural event or supply threat. 

MARKET DYNAMICS
The market is stable and growing slowly

• Automotive electrification and healthcare applications demand have become stable but remain the strongest. Suppliers are all focusing on EV-related technology investments.    
• Capacity investments from suppliers tend to focus on innovative products with higher ROI, resulting in older sensing technologies going end-of-life. New capital investment has been minimal due to the uncertain market situation.
• The request for sourcing out of China has started. As more suppliers provide sensor products from Asia, Europe, and the U.S., the China-based suppliers aggressively price to gain design-in to secure business.   

PRICE

• Price is stable as the market slows and demand drops. Cost reduction is only available for high-volume projects to secure 2024 demand. 
• Texas Instruments is still aggressive on project bidding and price offering for new opportunities and 2024 design. Prices are not likely to drop without new project opportunities.
• Leading Semiconductor manufacturers are conservative on price changes, and legacy products have seen some price increases.

SUPPLY

• Most Suppliers' capacity utilization is < 80% at a book-to-bill ratio of < 1.0. Automotive and Industrial demands will continue to grow in 2024 but at a slower rate compared to 2023. A market correction that impacts revenue and units-to-be-shipped basis is well underway and will continue through the first half of 2024.  
• Foundry utilization continued to fall until the end of 2023; OSAT Manufacturers are seeing a lower capacity utilization rate and a decline in backlog for most of the Timing IC Suppliers. Automotive and industrial companies are optimistic about growth in demand and weak demand from the consumer space.
• Lead times gradually reduced and now hover between 13 and 30 weeks. Most of the Timing IC Suppliers have improved Cancelation and Reschedule Windows, e.g., STM recently revised to four weeks CW/RW.
• Renesas has removed the Demand Securing Program on 52 weeks / NCNR and allowed adjustments for the second half of the 2023 backlog to ensure the actual demand is provided and understood.
• Microchip lead times for most products are at 30 weeks. There is flexibility to cancel or reschedule orders if the order confirmation date is > six months. They maintain the PSP to deal with supply and demand to stabilize supply.
• Texas Instruments - Timing is eight to 12 weeks; Texas Instruments’ second fabrication plant (commonly called a “Fab”) in Utah (USA) and the testing plant in Chengdu are in full production this year.
• ADI – Increased allocations at external Fabs. Queue times are reduced. Assembly constraints were largely eliminated. Test constraints improved, but there are still some challenges for legacy LTC parts. Lead-frame and laminate material shortages were resolved and are steadily reducing. Eighty percent of portfolio lead times <13 weeks. ADI plans a USD 1 billion upgrade on the Oregon plant.
• NXP is positive on Automotive parts with soaring demand. NXP is considering increasing investment in the Indian semiconductors market. NXP’s DAP (Demand Assurance Program) continues for 2024 for selected MPNs, mainly covering the Automotive segment.
• STM plans to invest USD 4 billion to increase the wafer production cap. STM projected that the automotive and industrial sectors will grow significantly more than average by 10.9% and 7.1%, respectively.

MARKET DYNAMICS

• Demand for wafers is on a downward cycle and adjusts according to market conditions; orders weaken, but the expansion trend will not decrease. Semiconductor manufacturing will see a leveling/settling into a new norm. Based on the findings of DIGITIMES Research, global foundry revenue is expected to reduce by 13.8% to USD 121.5 billion in 2023 due to the downturn in the semiconductor market. Looking forward to 2024, global wafer foundry revenue will rebound, but economic uncertainty and increased geopolitical risks will likely limit its growth.

• Demand trends from automotive and core industrial customers are resilient, but the supply constraints haven’t allowed them to grow at their desired rate.

• The automotive electronics segment will continue to record double-digit growth over the next three years as semiconductor content per vehicle will increase due to the transition to electric and autonomous vehicles. The average semiconductor content per vehicle is projected to grow from USD 712 in 2022 to USD 931 in 2025.

PRICE

• There is no change from most Timing IC Suppliers through the second end of 2023. The pricing levels are still holding firm. From the perspective of segmented applications, the delivery and prices tend to stabilize except for the relatively high automotive grade. 
• The demand from the enterprise and data center sectors and Automotive is holding up, so there is little incentive to reduce.
• Suppliers are not aggressively looking to trade cost reductions for more shares.