• The global semiconductor industry is facing a decline in demand in 2023, influenced by a convergence of macroeconomic and geopolitical factors following the previous years' Covid demand surge. 
• Omdia's latest forecast projects a 7.5% reduction in industry revenue in 2023 to $551 billion this year—down from the record revenue of $595 billion achieved in 2022. This downward trend can be attributed to decreased consumer expenditures on smartphones, PCs, and consumer electronics, ongoing tensions in the US-China chip war, and the adverse effects of high inflation on the overall growth of the semiconductor sector.
• As a result, there has been an accumulation of inventory in both supplier and distribution channels. Inventory levels have increased across all semiconductor manufacturing models. Omdia reports that semiconductor inventory value for Q4’2022 has soared by 38% to $81 Billion compared to $59 Billion in Q4’2021. Meanwhile, industry capacity utilization is running at 85% at the end of 2022 as opposed to in the 90s% range as observed in 2021 and 1H’2022.
• Given the ongoing uncertainties and weaker demand outlook, many suppliers are experiencing a book-to-bill ratio of less than 1.0, indicating a decline in new orders compared to shipments. 
• Customers are taking aggressive steps in inventory management, reducing shelf inventory, and exercising caution when placing forward orders. In response, vendors are reducing lead times and adjusting price points. We see the most significant effect of this on Standard/General Purpose components (i.e., Memory, Standard Logic.)
• Amidst these dynamics, there are hot spots in the industry. The automotive sector is driven by the growing demand for electric vehicles (EVs) and advanced safety electronics remains a focused growth market for most semiconductor vendors. Semiconductor vendors have also seen an uptick in demand within industrial market segments, specifically to power-related applications. As such, automotive-related components and power ICs (i.e., power MOSFETs, automotive MCUs) are expected to remain constrained for the quarters ahead.

Texas Instruments (TI)

• With the market softening, we are seeing lead times improve for all other devices, back to < 35 weeks except for the tight automotive products. TI announced a further capacity expansion in Lehi, Utah.
• TI supply is getting better with the newly invested capex expansion of LFAB2 which is expected to begin in the second half of 2023, with production expected as early as 2026. This additional capacity is welcomed after a rollercoaster of 3 years of instability. 
• The new fab will be located next to their existing fab and will operate as a single fab when complete. This will complement their existing 300-mm fabs, DMOS6, RFAB1, RFAB2, and LFAB1, as well as the previously announced fabs being built in Sherman. We do see significant lead time improvement for non-golden screw devices back to 12~20 weeks with the exception of automotive devices which still remain constrained.
• LBC5, 6, 7, 8, and 9 wafer processes remain critically constrained. Lead times have stretched to 35 weeks or more. (MPNs: TLCxx, TLVxx. TPSxx, DRVxx,ISOXXX ).
• Highly constrained at the backend and assembly facilities

New Capacity investments announced in 2023

Front End Fab

• Lehi Fab – Acquired from Micron. Advanced Analog and Embedded Processing –online in December 2022
  • 65-nm nodes (F65/C021)
    • Lehi Fab2 - Ready in 2026
    • Sherman Fab (Texas) –Ready 2025
  • Size of 4 RFAB2
    • 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 52 weeks. 
• Any accepted push-outs will be charged with a 10% fee, while a 30% cancellation fee will be required but still subject to MCHP BU review and final approval.
• Microchip continues to operate a preferred supply program (PSP) which is designed to deal with the supply constraints impacting the electronics industry.

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 26-45 weeks lead time. Strong demand from the automotive segment. 
• Onsemi has recently announced the successful completion of its acquisition of GlobalFoundries’ (GF’s) 300 mm East Fishkill (EFK), New York site and fabrication facility.

STM

• For orders released before 4/1/23, any backlog with a ship date within 2023 will continue to see NCNR terms applying. 
• The new cancellation and reschedule terms are only applicable for new orders released from 4/1/23 onwards, as well as any existing backlogs with a ship date from 1/1/2024 onwards.
• Lead times in the range of 37 weeks to ~48 weeks.
• STM capex expansion is mainly focused on internal wafer fabs, so automotive MCU, SIC, analog, discrete, MOSFET, and sensors. 
• Most of their MCUs are still outsourced through TSMC’s 8-inch wafer fabs. There are also some internal fabs such as Crolles 12 inches, Rousset, Agrate, Catania (SiC), and Singapore (SiC).

Renesas

• With the current softening in the market, Renesas has improved the lead time of analog power products to 18-36 weeks. 
• These new lead times are effective April 1^st, 2023. We are now seeing a more balanced supply situation and environment, so Renesas has decided to end the DSP program, clean up the backlog and drive true demand in order to avoid duplicate orders and in turn protect against excess inventory.

Renesas Calendar Quarter +1 - No cancellations or Push-Out 

• Any exception must go via an exceptional approval process; cancellation fees may apply 30% for WIP and 50% for assembly and test.

Diodes

• They have seen declines in Personal electronics, Communication, Enterprise, and Industrial demand however Automotive is still very strong.
• lead times have improved but remain well above 30 weeks.

ADI

• 50% of ADI’s portfolio has a lead time of less than 13 weeks. ADI expects lead times for 95% of their portfolio (75K+ unique parts) to be at 13 weeks or less by October of this year. 
• We will continue to monitor the supply and update lead times as appropriate.

Foundry/OSAT update

• Some investments in growing 8-inch capacity.
• 12-inch capacity expansion is mainly on advanced nodes.
• $900M capex to expand internal 8-Inch capacity. 12-inch strategic opportunities are being reviewed.

Assembly update

• Significant capex by their OSAT partner has increased capacity in assembly.
• Additional CAPEX investments being discussed.
• Long term agreement with OSAT partner. Co-investment with lead frame and laminate suppliers.

• Global power semiconductor market growth is supported by numerous drivers, such as:
  • increasing demand for electrification in automotive
  • rising adoption of industrial automation
  • rising demand for consumer electronics, and 
  • increasing demand for renewable energy.
• The 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.
• Analog Devices invests in a new industry 4.0 IC facility in Raheen Business Park in Limerick, Ireland.
  • The new facility will support ADI’s development of next-generation signal processing innovations designed to accelerate the digital transformation of industrial, automotive, healthcare, and other sectors.

• As economic headwinds persist, so does uncertainty. Weakening demand and oversupply, including excess inventory, are affecting unit shipments as well as pricing. 
• Generally, pricing is expected to be flat or slightly reduced as suppliers are more willing to negotiate price as they look to increase share and in order to keep their book-to-bill ratios positive.
• Some companies have cited strong overall demand in their strategic markets, particularly in automotive and industrial, and are therefore not affected by the reduction in demand. 
• We need to continue monitoring the inventory levels and price trends for the 2nd half of 2023.
• Renesas – Some increases effective 1st Jan 2023, across all customers.
• Onsemi – Some increases and de-focus on legacy/commodity products.
• Microchip – Some increases.
• STM – Flat.
• ADI – Flat.
• TI – Some decreases.
• Future price developments are directly linked to each supplier’s capacity status which requires continuous monitoring

• We are seeing a reduction in orders, prices returning to normal, and an easing of supply. Most Logic suppliers have advised that lead times have stabilized. Nexperia advised 6-8 weeks (except for EOL packages) and have removed allocation. TI has significantly improved lead times to 8 weeks except for automotive devices. 
• Lead times have been adjusting downwards for standard logic; 6-12 weeks depending on the package. 
• The market continues to trend towards a healthier supply landscape as demand for semiconductors, especially in consumer, PC, and smartphone end markets softens. The shrinking demand for consumer electronics is forcing orders to be canceled and resulting in inventory build-up of standard components at both manufacturers and distributors. 
• Foundry utilization continues to fall through the first half of 2023. The OSAT suppliers are quoting 80% ~ 90% capacity utilization rates and a decline in order books. In general, book-to-bill ratios are now less than 1.0. Global POS sales have been declining over the last 2 quarters for the key logic suppliers. 
• New capacity planned amidst a historic chip shortage will gradually come online through 2023 from TI and Nexperia. 
• Onsemi plans a transfer of the standard logic portfolio manufactured in Tower Jazz to Vanguard Semiconductor and consolidation of backend manufacturing sites for similar packages for 90% of the logic portfolio except for metal gate.

• Wafer demands in 2023 are expected to be flat or decline slightly, while capacity is expected to grow about 7 percent in 2023.
• Within 2023, the growth contribution of the automotive segment will increase as the penetration rate of automobile electrification increases. 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.
• The steep declines in PC and smartphone demand is clear but do not expect an industry-wide oversupply of semiconductors, as demand in automotive, industrial, and medical remains robust. 
• Logic suppliers (SG Micro and Wuxi ICORE) are coming into the logic supply landscape offering competitive pricing.

• The orders, demand, and prices of consumer-related components continued to fall while automotive and industrial materials tended to be stable. 
• Suppliers are more open to price reviews in order to gain share due to softening demand in some sectors. 
• TI and Nexperia have been more aggressive on price to win more share of the declining demand. 
• Microchip imposed a price increase effective 1st March 2023.
• We need to keep a close watch on push-outs and cancellations across some end markets as the cuts made to production may be too deep and could eventually create a problem should demand bounce back.

• The market correction continues for the consumer segment with a bottom expected at the end of Q2 2023, followed by a slow recovery starting from Q3 2023.
• PC inventory is expected to be depleted somewhere in Q2 or Q3 2023, hence suppliers are expecting new orders for fresh builds somewhere in Q3 2023. 
• On average, most suppliers are carrying 3-5 months of inventory inclusive of the distribution channel.
• Average lead time based on technology:
  • General Diodes: 12 -16 weeks
  • Switching Diode: 16 weeks
  • Schottky Barrier Diode: 12 – 16 weeks
  • ESD & TVS: 12 – 16 weeks
  • Zener Diode: 8 – 14  weeks
  • BJT Transistor: 40  weeks
  • Low voltage MOSFET: 40 – 45 weeks
  • High voltage MOSFET: 45 weeks
  • Sic: 39 – 45 weeks
  • Automotive MOSFET: 52 weeks (allocation)
• Infineon lead time remains stable with a slightly better lead time of around 50 weeks. Infineon continues to focus on automotive which accounts for 45% of Infineon’s total revenue. 
• With the acquisition of GaN system, Infineon has also started to focus on GaN development and is targeting revenue of 6 billion euros in 2027 from GaN products.

Front end:​​​​​​​​​​​​​​​​​​​​​

• Villach fab is operational and ramping up in 2023, focusing on SiC Mosfet.
• The Kulim site in Malaysia will focus on SiC with the first volumes due in the second half of the calendar year 2024. 
• Infineon is targeting to increase capacity for SiC by 10X to 3 billion euros by 2027.

Backend:

• The expansion of backend manufacturing capacity in Batam (Indonesia) mainly for automotive power IC is expected to be ready for production in 2024.

• Onsemi’s book-to-bill ratio remains strong as over 50% of their backlog is covered by long-term supply agreements (LTSAs). Onsemi also announced that they would be moving out of commodity part supply, such as Zener diodes, small signal, etc., over the course of the next 3 years. Capacity utilization remains high despite some minor drops in demand for industrial products.

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
• BK8 (8-inch) expansion on MOSFET and IGBT completed in 2022
• 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
• STM has softened its NCNR clause for new orders to allow for demand corrections. Overall STM lead times remain stable and STM is focusing more on SiC and is targeting 2 Billion USD of SiC revenue by 2026. 2024 free capacity for SiC is running low with existing orders filling up most of the capacity.

Front end:

• Catania’s new 150 mm SiC fab will be operational from 2023 onwards providing a boost in SiC capacity.

• Vishay’s book-to-bill ratio for diodes is 0.7: 1. For MOSFET the book-to-bill is around 0.95.
• For diodes, Vishay is pushing to increase capacity for the SMF package, and a new plant is operating in KaoShiung to add further capacity.
• With the acquisition of MaxPower Semiconductor, Vishay has officially joined the SiC supply base. Expect a range of SiC MOSFTET to be available from 600V to 1200V by the end of 2023.
• Vishay is expected to launch their Gen 1 Plannar SiC MOSFET at the end of 2023 while Gen 2 trench SiC MOSFET mass production will be towards the end of 2024.
• For Nexperia, the majority of their product is out of allocation. Their book-to-bill for MOSFET is slightly above 1 while diodes book-to-bill is 0.8. Nexperia is fighting to win back market share.
• The UK government remains firm on their insistence for Nexperia to divest 86% of the Newport fab. The risk of the Newport fab becoming commercially unviable is increasing. If the Newport fab fails, the subsequent capacity increase for IGBT, analog, and compound semiconductors will also stall.
• Capacity expansion: increasing global front end and back end capacity​​​​​​​

Front End:

• Wafer fab in Hamburg (Germany), Manchester, and Newport (UK) – ongoing conversion from 6 to 8 inches.
• Nexperia also continues to negotiate and add external foundries for increased wafer capacity.
• 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

• Bookings are weak for second-tier suppliers due to over-reliance on the consumer market which has softened due to weak consumer sentiment. Hence, second-tier suppliers are aggressively seeking orders to fill their free capacity.

• Per LMC’s Automotive Global Light Vehicle Report, sales rose to 86 million per year in April from 84 million per year in March, underscoring strong demand in the automotive market despite a turbulent economic market backdrop.
• The war in Ukraine is disrupting the supply of natural gas to the EU and driving up the prices of energy. In response, the EU has come out with a 10-point plan to tackle the region’s reliance on Russian natural gas. 
• The EU projects an increase of 35 terawatt-hours (TWh) on top of the existing 100 terawatt-hours (TWh) within 2023, which is a 35% increase. With the supply of solar panels keeping up with surging demand, the demand for inverters has also increased tremendously. 

• Price remains largely stable in 2023 for the majority of suppliers.
• For diodes, we see some cost reductions as we leave an allocated market and multiple suppliers are working to win back market share.
• For the industrial MOSFET segment, pricing remains stable, with minimal decreases expected due to some suppliers looking to grow market share.
• For the automotive space, MOSFET and diode pricing remains largely stable with some increases expected due to demand from the automotive market remaining strong.

• Supply has normalized from most manufacturers on most product categories Opto couplers, InfraRed (IR) devices, and optical sensors, except the solid state relay SSR, especially from Japanese manufacturers. 
• Demand is mainly driven by automotive, industrial, and renewable energy sectors.  Lead times returned to normal – 12 weeks for Asian manufacturers, and up to 30 weeks for US and Japanese manufacturers.
• Single-source, semi-customized LED manufacturers, such as Visual Communications Company, Panasonic, Nichia, Dialight, Vishay, and KingBright, continue to announce the EOL of their legacy products.  
• Customers are advised to work closely with us to qualify Jabil preferred suppliers in order to mitigate supply risks.
• Most LED suppliers are chasing business, especially in growth sectors such as energy and EV transformation, healthcare, and enterprise infrastructure. Consumer market demand has stabilized at a comparatively low level.  
• Push-out activities are ongoing as lead times drop; on the other hand, customers are conservative with inventory.   
• Customers may work with us to qualify our preferred suppliers to quickly ease shortages in individual product categories from top-tier suppliers’ EOL products.

• Top-tier optoelectronics suppliers are focusing on the automotive market, especially EV market development. New products on automotive applications will launch in the next few quarters. 
• Asian-based suppliers are expanding to new business areas in order to capture new business opportunities and maintain competitiveness. 
• Smaller manufacturers and those that are not automotive suppliers will face another challenge in the next few quarters if the economy does not bounce back as expected.

• Prices are stable for all product types in Q3’2023. Suppliers are not providing flexibility on price. 
• They are not increasing prices significantly, even as they are being impacted by material cost increases. 
• Most suppliers are just maintaining existing pricing levels in order to keep market share. Price increases are being seen on the EOL of legacy products and selected circuit board indicators (CBI), and light pipe and opto couplers due to the ongoing increases within raw materials.
• Automotive and healthcare sectors are the growing markets as far as demand. Consumer market demand likely bottomed out last quarter and is expected to resume in the 2nd half of 2023.  
• Prices are stable as suppliers are depleting inventory and looking forward to a bounce back at the end of this year.  Customers are strongly advised to work with us to qualify 
• Jabil preferred suppliers, especially for sole-source sockets and legacy products to mitigate impacts from price increases.  
• In China, higher labor costs are affecting price levels on labor-intensive parts, display, and housing LED or through-hole parts.  Some suppliers are exiting these component markets.

• DDR4: Some constraints.
• DDR3: Few constraints but with some available production options.
• Legacy (SDRAM, DDR1,2): Stable  (Look to 2nd tier suppliers for support)

• China’s CAC has excluded using Micron products for critical information infrastructure in China. CAC is notifying critical infrastructure companies directly.  Follow GCM alerts as more information becomes available.
• Analysts predict market stabilization in CY23 with limited bit growth but AI and 5G gradually rising. 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 Q3. Lead times are currently normalizing. 
• Major suppliers are downgrading growth predictions for CY23.  
• Suppliers are reporting capacity in DDR3.  Look for support from most suppliers as deals can be made.
• Ukraine/Russia conflict is reportedly not likely to cause an impact on raw materials. 
• PC and server demand continues to normalize, and handset demand has flattened moving into the 2nd half of CY23.
• Look for, and take advantage of, Short Term SPOT-Market lower pricing opportunities and over-supply opportunities. 

• DDR4: Some decreases.
• DDR3: Some decreases.
• Legacy (SDRAM, DDR1,2): Some decreases

• Asynchronous :
  • Low Power: Stable
  • Fast SRAM: Stable
  • Slow SRAM: Stable
• Synchronous:
  • Quad Data Rate: Stable

• Overall SRAM TAM is stable.
• A stable demand and supply base still exists in the marketplace today.
• Balanced market conditions are expected to continue throughout CY2023. 
• Expect lead times to stay extended due to increased orders from suppliers.
• Look to 2nd tier suppliers to help on 1st tier constrained suppliers.

• Asynchronous: Stable
• Synchronous: Stable

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

• China’s CAC has excluded using Micron products for critical information infrastructure in China. CAC is notifying critical infrastructure companies directly. Follow GCM alerts as more information becomes available.
• Contamination issues have waned at the joint Western Digital/Kioxia Nand factory that impacted up to 6.5 exabytes of flash memory.  Production of  3D Nand is normalizing. NAND pricing is lowering but is expected to bottom out by the end of the year.  
• Expect short-term pricing reductions in Nand Flash products and related products using Nand Flash (eMMC and SSDs). Take advantage of oversupply pricing and spot market pricing where applicable. Continue to forecast effectively.
• Controller chip allocation is easing slightly at major suppliers of SSDs, eMMC, memory cards, and USB devices.  2nd half of 2023 shows some normality.
• The Ukraine/Russia Conflict is reportedly not likely to cause further impact to flash production or pricing, but customers need to be kept aware should impacts arise.
• Short-term demand has slackened in the 1st half of 2023 and pricing is reflective of this and expected to continue into the 2nd half of the year.   Give suppliers as many forecasts and hard orders as possible to ensure supply.
• Controller chip allocation is easing slightly at major suppliers of SSDs, eMMC. Memory Cards and USB devices. The first half of 2023 shows some availability.
• The Ukraine/Russia Conflict is reportedly not likely to cause a further impact on Flash production or pricing, but customers need to be kept aware should impacts arise
• Short-term demand has slacked in the first half of 2023 and pricing is reflective of this.  There is some doubt about the second half concerning supply/demand. Give suppliers as many forecasts and hard orders as possible to ensure supply.

• Planar NAND: Flat/Decreasing
• 3D NAND Flash: Flat/Decreasing

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

​​​​​​

• Alert!! China’s CAC has excluded using Micron products for critical information infrastructure in China. CAC is notifying critical infrastructure companies directly. Follow GCM alerts as more information becomes available.
• NOR Flash memory is anticipated to remain tight through 2nd half of 2023.
• Rising popularity of true wireless products (increasing demand for NOR flash memory) is expected to continue through 2023. 
• Additional impact of 5G product introductions could make supply tight; keep abreast of market issues.
• NOR flash foundry partners are also seeing increased demand from non-memory products that yield higher margins; this will limit capacity expansion plans for NOR flash.
• Ukraine/Russia conflict is not likely to cause material shortages, but customers need to remain vigilant.  
• No lockdown issues (due to COVID-19) are being reported going into the second half of CY2023.

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

• EEPROM: Stable.

• EEPROM is a matured memory technology.
• There is stable demand and a supply base that continues to support the marketplace today.
• Balanced market conditions are expected to continue throughout 2023.
• Make sure to monitor lead times and give ample forecasts.
• As major suppliers continue to extend L/Ts and have capacity constraints, look to  2nd tier suppliers for support.
• COVID lockdowns have diminished.

• EEPROM: Stable.

• Stable/ Few Constraints

• China’s CAC has excluded using Micron products for critical information infrastructure in China. CAC is notifying Critical infrastructure companies directly.  Follow GCM alerts as more information becomes available.
• SSD growth in 2023 for automotive applications is expected to outperform previous years.
• Growth in half-height, half-length (HHHL) is also expected to increase in 2023. These form factors provide better performance.
• PCle SSDs offer higher performance and reduced latency.
• The demand for SSDs has been rapidly increasing within an emerging number of Cloud platforms.
• Presently, SSD costs are still higher than HDD but 3D nand flash costs are changing dramatically moving into 2nd half of 2023.
• Consider suppliers looking for short-term offers. Take advantage of pricing where possible.

• Decreasing for 2nd half of 2023

• Lead times are stable compared to last quarter; the market keeps moving slowly except for the automotive and healthcare segments.   
• Supply of raw materials is also stable and becoming normal without any constraints (connectors, semiconductors die, lead frames, substrates, etc.) However, some old technology products will see no capacity investments. It is time to phase out these components. 
• Top-tier global suppliers like Texas Instruments, Onsemi, Maxim, etc. are stable now. We expect demand to bounce back next year as top-tier suppliers lock up the 2023 supply and inventory depletion will come to an end. We recommend diversifying and being multi-sourced. China-based suppliers are aggressively looking to gain design-in with better lead times and costs. 

• Demand for automotive electrification and healthcare applications remains strong. Suppliers are focusing on EV-related technology investments.     
• Capacity investment from suppliers focus on innovative products with higher ROI, resulting in older sensing technologies going end of life. New capital investment is conservative due to the uncertain market situation.

• Supply normalized except for some particularly old product categories. Prices will increase when suppliers start to phase out these selected products. Some suppliers announced the removal of surcharges which were added last year.
• Inflation is still hurting on operating margin; prices have increased, moderately. Capacity utilization is at a lower level due to inventory in the distribution channel. Prices are not likely to drop without new project opportunities. 
• Leading semiconductor manufacturers are conservative with any positive cost movement; legacy products continue to face some price increases. 

• Automotive electrification, Healthcare, 5G, and IoT applications demand has slowed recently but continues to drive demand.  Suppliers are focusing on EV-related technology investments.    
• Capacity investment from suppliers will go to innovative products with higher ROI, resulting in older sensing technologies going end of life.  Smaller companies are struggling to compete due to rapid technological changes and an uncertain market situation.

• Supply remains constrained on some product categories which caused price increases across selected families.
• Inflation and currency issues have increased the manufacturing cost causing semiconductor price pressure. 
• Leading semiconductor manufacturers are not providing any pricing relief.

• Supply constraints still exist but the market should be in better shape after the first half of 2023.
• Some industrial customers are now slowing their orders, joining manufacturers of computers and smartphones in cutting back demand.
• Semiconductor demand is still robust in the automotive segment.
• Based on the status of various foundries’ client orders, there is relief on the supply of wafers after the 2nd half of 2023. Fab utilization (foundry) has dropped to an 80% level from 95% in 2022. This will allow for inventory and lead times to start to normalize.
• Lead times continue to gradually reduce and now hover between 26 weeks and 36 weeks. The lead times will shorten across chip types and are expected to return to normal levels by the 2nd half of 2023.
• Renesas has removed the 52 weeks / NCNR program and allowed adjustments for 2nd half of the 2023 backlog, to ensure the actual demand is provided and understood.

• Revenue growth is driven by the continuation of strong demand across all end markets. Prices are surging in the chip supply chain. With the continued robust demand, suppliers expect supply to be a challenge for the foreseeable future. The current front-end and back-end loading is very high with most capacity booked through 2023 and beyond.
• Suppliers are cautious about the impact of the Omicron coronavirus variant as the fast-spreading variant has brought a return of Covid protocol in some regions.
• NXP - as of Q2’21, long-term contractual purchase obligations had increased 10x from the commitment reported in Q4’20.
• ST - plans to invest approximately $3.4 billion to $3.6 billion in CapEx in 2023 to further increase production.
• Intel to acquire Tower Semiconductor for $5.4 billion. This acquisition accelerates Intel’s global, end-to-end foundry business.

• There is a significant cost increase on wafers, lead frames, substrates, assembly and test, and logistics. With a limited supply of wafers, most suppliers are raising prices due to higher costs. Suppliers are forced to absorb some of the cost increases and try to ensure supply continuity. Many suppliers are reporting strong book-to-bill ratios at 1.2~1.5:1 and their backlogs are extended through 2022 and the first half of 2023.
• We forecast additional price increases in Q2’23, as demand is still very strong.