Near-Term Demand Weakness Persists

• The semiconductor market is undergoing significant shifts, as evidenced by recent Q1'24 earnings reports from major industry players. Across the board, suppliers are grappling with declining revenues, supply chain complexities, and numerous market-specific headwinds. Previously thriving growth market segments like Industrial and Automotive are experiencing contractions and negative year-over-year growth rates.
   

Cautiously Optimistic about the Second Half of 2024 and Bullish for the Future

• The inventory glut has seemingly improved relative to last year, and suppliers are cautiously optimistic about the second half of the year, expecting a stabilization of demand. Despite the uncertainties, many semiconductor suppliers remain committed to their capital expenditure (CAPEX) plans and continue to invest in capacity expansion.
• The long-term demand outlook for chips remains solid, as semiconductor chips play an increasingly critical role in all the products in our lives.
• The semiconductor industry's revenue is anticipated to reach USD 1 trillion by 2030, up from USD 600 billion in 2024. This growth will be significantly driven by increasing semiconductor demand for applications such as artificial intelligence, high-performance computing, factory automation, advanced driver assistance systems (ADAS) in automotive, and image recognition for healthcare applications.

SUPPLY

• As we enter the second half of 2024, the semiconductor sector is experiencing a continued reduction in demand, primarily due to high inventory levels and a slow recovery of orders. The Analog market, lacking a robust backlog, continues to adjust in response to changing demand patterns. This is partially due to the slower recovery of the consumer market and a decline in demand from both the automotive and industrial sectors.
• In their earnings calls, most suppliers reported a slight improvement in their book-to-bill levels in the second half, but they have yet to reach the desired level across most market sectors. Most suppliers exhibit a book-to-bill ratio of less than 1.0, and their capacity utilization remains around 70%. This situation could lead to excess inventory issues if the market does not improve.
• Recent geopolitical shifts have impacted semiconductor sales and led to disruptions and uncertainty in the global supply chain, particularly due to the most recent round of tariffs imposed by the US on China. Despite these hurdles, the industry adapts by investing in geographic diversification and resilience. There has been a notable shift in the global distribution of chip-making capacity, referred to as the "China +1" strategy.
• This strategic initiative aims to reduce the risks associated with supply chain disruptions and ensure a more stable and reliable supply of semiconductors in the future.
• Overall, supply and lead times for semiconductors have returned to their historical norms.

Texas Instruments (TI)

• In its Q1 2024 earnings call, TI announced a revenue of USD 3.661 billion. The company's capital expenditures are expected to remain at the previously announced rate of USD 5 billion per annum over the next three years. Significant R&D investments have been directed towards the Industrial and Automotive sectors.
• TI has demonstrated eagerness and determination to compete with local Asian suppliers to gain market share. This competitive edge is primarily attributed to its state-of-the-art manufacturing footprint, breakthrough technology, and broad product portfolio. Its lead times have returned to the standard range of 8 to 12 weeks.

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 have improved to 26 weeks for both standard & automotive products.

Onsemi (rebranded from ON Semiconductor)

• The lead times for Standard Analog products, including AC/DC, DC/DC converters, Interface (RS232, RS485), VR, LDO, Drivers, Mixed Signal/Amplifiers, and Comparators, continue to improve, now quoted at 12 to 26 weeks. Additionally, Onsemi has announced that CW/RW (Cycle Week/Revision Week) will improve to 60 days for parts from the Power Solutions Group (PSG), excluding automotive devices.
• The newly formed Analog and Mixed-Signal Group (AMG) will focus on power management ICs, high-precision, low-power sensor interfaces, and communications products.

Renesas

• With the market softening, Renesas has improved the lead time of Analog and Power products to  12 to 24 weeks, effective 15 May.

Diodes, Inc.

• Diodes anticipates a broad-based slowdown in the global industrial market and softness in the automotive sector, primarily due to customer inventory adjustments and excess inventory on the distribution side. Their lead times are currently between 10 and 16 weeks.

STM

• Improved lead times for standard linear products, now ranging from 16 to 24 weeks, with all their standard products' CW/RW returning to a four-week window effective early 2024.
• STM's CAPEX expansion primarily focuses on internal wafer fabs and sectors such as Automotive MCUs, SiC, analog, discrete, MOSFET, and sensors.
• While most of their MCUs are still outsourced through TSMC’s 8-inch wafer fabs, STM also operates internal fabs in locations such as Crolles (12 inches), Rousset, Agrate, Catania (SiC), and Singapore (SiC).

ADI

• Wafer: 53% External, 47% Internal
• Assembly: 89% External,11% Internal
• Final Test: 17% External, 83% Internal
• Leadtime: 95% of Parts < 13 week
• ADI/MAXIM ERP Integration – Completed

MARKET DYNAMICS

• Significant tariff hikes have been imposed on Chinese imports, including electric vehicle (EV) batteries, computer chips, and medical products.
• The global political environment has necessitated the evolution of supply chains, differentiating between China-related and non-China-related components.
• The soaring global demand for artificial intelligence (AI) and high-performance computing (HPC) is expected to create a new wave of growth.
• The server market is anticipated to experience an upward trend driven by AI advancements and increased demand.
• The alignment of the automotive and industrial sectors with global electrification trends is expected to normalize inventory levels by the second half of 2024. It is crucial to continually scrutinize demand forecasts and provide immediate clarity to suppliers to prevent a recurrence of the supply shortages experienced in recent years.

PRICE

• Due to the unpredictability of the market in the second half of 2024, numerous suppliers are grappling with an oversupply of chips. They are prepared to offer competitive prices to capture market share and maintain their overall production levels. The primary challenge remains excessive inventory and diminished demand from end customers, posing significant obstacles to the demand for cost reductions.
• For high-performance analog products, pricing levels are expected to remain flat, with most prices tied to end-customer contracts. Here is an overview of the pricing trends for key players in the semiconductor industry:
   
  • Renesas: Pricing remains flat.
  • Onsemi: Minimal reduction in prices.
  • Analog Devices (ADI): Prices remain flat.
  • STMicroelectronics (STM): Prices remain flat.
  • Diodes: Minimal reduction in prices.
  • Texas Instruments (TI): Minimal reduction in prices.
• Given these conditions, the semiconductor price trend for 2024 is likely to moderate and fluctuate depending on market conditions.

SUPPLY

• Most suppliers experienced a significant decrease in financial performance in the first half of 2024. However, they are hopeful for a modest recovery and better performance in the second half of 2024.
• Lead times have improved for standard logic products due to lower bookings and ample supply.
• Many industries are still grappling with inventory and cyclical demand pressures.
• Most suppliers' capacity utilization is below 80%, with a book-to-bill ratio of less than 1:1.
• Automotive and industrial demand will continue to grow in 2024 but slower than in 2023.
• Texas Instruments has undergone significant optimization and technology transitions to newer nodes over the past six to eight quarters to improve capacity. This effort enhances supply chain resiliency and mitigates future supply chain constraints.
• Texas Instruments has seen significant lead time improvement, except for automotive devices. The lead time for logic products is quoted at an average of six weeks, aiming to capture a broader market share with better prices and ample supply.
• Nexperia advises a general lead time of six to eight weeks, pursuing more orders for Pico Gates Logic, and has seen improved visibility in semiconductor growth as the extended inventory correction concludes in major market segments like PCs and smartphones.
• Onsemi has transferred the standard logic portfolio manufacturing from Tower (Japan/Israel) to Vanguard Semiconductor (Taiwan) and consolidated backend manufacturing sites for similar packages for 90% of the logic portfolio, except for metal gates. This has resulted in better supply and lead time improvements.

MARKET DYNAMICS

• Fab equipment spending is expected to remain flat at USD 103 billion in 2024, which is lower than our last projections in 4Q23. Investment in new fab construction projects is expected to decline 16% to USD 33 billion in 2024.
• TSMC believes that inventory levels will return to a healthier state; however, the weak macro economy and geopolitical uncertainties may persist, impacting consumer sentiment and end-market demands.
• UMC and Vanguard International Semiconductor (VIS) experienced a significant decrease in demand in 2023 but expect a modest recovery in 2024. UMC anticipates a slight fall in utilization rates and rising wafer shipments by two to three percent year-on-year in the first quarter of 2024.
• Generative AI exploded in 2023, becoming the hottest technology trend reported by the media. New technology commercialization is expected to occur in 2024, particularly in applications for edge-AI devices.
• Three factors are certain for the electronic component market in 2024:

               1. Excess electronic component inventory will still be an issue in 2024.

               2. Most markets will begin to recover in the second half of 2024.

               3. Artificial Intelligence will continue to drive demand in 2024 and into 2025.

PRICE

• Suppliers are quoting competitive prices to capture more market share amid sluggish demand and order cuts.
• Suppliers aim to trade allocation at lower prices, but they are facing continued macroeconomic and inventory challenges.
• Texas Instruments and Nexperia are offering competitive pricing to gain a larger share of the declining demand.
• Onsemi maintains stable pricing and believes that the Long-Term Support Agreement (LTSA) is holding firm for supply and demand on logic products. Onsemi has shifted wafer supply from Tower to Vanguard Taiwan for 90% of the logic family, but there is no indication of more competitive pricing.

SUPPLY

• Overall supply has returned to normal, although inventory levels in the distribution channel remain slightly high, with over three months of supply. Small signal diode inventory in the market is higher due to the overall softening of demand.
• Diode and MOSFET inventory levels remain relatively high.
• Small package DFN inventory is slightly better, with orders flowing in from the mobile market. Further monitoring is required as suppliers are uncertain whether this is a seasonal demand uptick or a sustained trend.
• Power device inventory is at an optimal level.
• High-power devices, such as high-voltage MOSFETs and high-current diodes, remain constrained.
• Average lead time based on technology:

• Infineon's supply remains stable, and with flat bookings, the company is forecasting similar revenue for 2024 compared to 2023. With Infineon’s diversity and focus in the automotive, industrial, and connected secure system markets, they anticipate a stable revenue stream in 2024.
   
  • Front End: Given its undisputed leadership position in power systems, Infineon has invested additional money in SiC for the third phase of its Kulim plant. This will significantly increase capacity, growing by 15 times compared to 2023. The third phase is targeted for mass production in 2027.
  • Backend: The expansion of backend manufacturing capacity in Batam (Indonesia), mainly for automotive power ICs, is expected to be ready for production in 2024.
• Onsemi is quoting a slight increase in inventory—now 8 to 9 weeks—due to weaker market demand. Onsemi has ample capacity for new market opportunities due to internal capacity expansion and slowing demand.
   
  • Front End:
     
    • EFK (12-inch): Multi-year expansion underway, including MOSFET Trench, 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 50,000 square-foot assembly and test capacity per year.
    • Expansion of power discrete and module multi-source capabilities.
• STM lead times have improved slightly. Removing NCNR (Non-Cancelable, Non-Returnable) terms, STM is now experiencing significant order cuts due to demand adjustments from customers. The inability of customers to adjust their orders in 2023 caused an over-inventory issue that ultimately affected their Q1 2024 revenue. In view of a slower market, STM has also adjusted down their Capex for 2024 to 2.6 billion USD compared to the previously committed 5.99 billion USD.
• Nexperia's Lingang plant became operational ahead of schedule, significantly increasing its capacity. This allows Nexperia to gain more market share and business. Nexperia aims to quadruple its revenue to 8 billion USD by 2030, indicating that a more aggressive market approach can be expected.
   
  • Front End:
     
    • Wafer fab conversions from 6-inch to 8-inch are ongoing in Hamburg (Germany) and Manchester.
    • Nexperia is also negotiating with and adding external foundries for increased wafer capacity.
    • A new 300mm (12-inch) wafer fab in Lingang (Shanghai) will go online in 2024.
  • Backend Assembly:
     
    • Expanding their factory in Dongguan (China).
    • Investing in extra capacity in Cabuyao (Philippines) and Seremban (Malaysia).
    • Implementing advanced automation.

MARKET DYNAMICS

• Global light vehicle sales reached 8 million cars in March, a 2% increase year over year. Although this figure remains solid, close monitoring is advised as there is a risk of further slowdown due to the new US-imposed tariff on Chinese EVs.
• The new US tariff on renewable energy raises concerns about potential price increases for related products. This could impact the US goal of halving climate pollution within the next six years.

PRICE

• Overall, pricing for diode commodities remains stable, with little room for movement after initial cost reductions and muted demand. While MOSFETs trail diodes by a few quarters, no significant price changes have been observed. This stability is mainly due to the relatively strong demand for MOSFETs compared to diodes.
• With the price of copper hitting a record high, there is a risk of price increases for high-voltage MOSFETs that use copper clips.

SUPPLY

• Supply conditions are normal for most manufacturers of LED-related products. Competition remains keen as capacity is still readily available from numerous China-based suppliers.
• The supply of optocouplers, infrared (IR) devices, and optical sensors is normal. However, as the inventory of most suppliers and their channel partners has been depleted, meeting ad hoc demand is challenging without buffer inventory. The lead time for optocouplers and solid-state relay (SSR) products from Japanese manufacturers remains extended and is expected to persist throughout the year.
• Suppliers' business is improving as most customers anticipate increased demand in the second half of the year and plan orders according to lead times. Chip delivery and raw materials, such as PCBs and substrates, are tight. OEMs need to provide better demand visibility; otherwise, they may not receive support for short-term orders.
• Demand in the automotive and industrial segments has stabilized. Due to seasonality, consumer market demand is expected to improve, but there may be delivery issues for products with longer wafer lead times.
• Global brands’ lead times are flat as automotive shipments have softened, easing chip supply constraints. Lead times remain 15 to 28 weeks, while Asian brands quote 8 to 16 weeks.

MARKET DYNAMICS

• With the gradual slowing of growth in the automotive (EV), healthcare, and industrial markets, wafer capacity is evenly allocated across market segments. Optoelectronics uses older wafer technology nodes, and supply is secure with appropriate production planning.
• As EV vehicle prices drop, manufacturers continue to explore Asian-based suppliers for cost benefits. Small-scale companies are investing to qualify as approved automotive suppliers. Price competition in the automotive segment may reduce the costs of high-end products.
• The focus on artificial intelligence (AI) products will benefit the optoelectronic commodity, as data storage and networking will generate high demand for components to support this market.

PRICE

• Pricing will remain flat for all product types in the second half 2024. Suppliers control prices as demand is unclear and raw material costs fluctuate. Most suppliers do not see the need to reduce component pricing; instead, they are preparing to increase prices if customer demand drops significantly.
• Suppliers are only reviewing pricing for new opportunities and demand. Cost reduction opportunities are available for new projects.
• Growth in the automotive and healthcare sectors is stable. Consumer market demand has seen an uptick from selected customers. Inventory levels are healthy, and pricing is stable with balanced supply and demand.

SUPPLY

• The DRAM market faces challenges with manufacturing capacities, particularly for leading-edge technology and High Bandwidth Memory (HBM) used in AI data centers. This is causing inefficient utilization of overall capacities. New semiconductor plants are coming online, but the ramp-up is slower than anticipated, further restricting output and contributing to supply constraints.
• Shortages of critical components like power management ICs (PMICs), essential for server-grade DDR5 memory modules, have also impacted supply. Delays in deliveries of DDR5 chips by major manufacturers aggravate this situation, as not enough chips are available for module makers, slowing down the production and supply of newer DRAM modules​.
• Geopolitical tensions and strategic competitions, particularly involving major semiconductor-producing countries, add another layer of complexity to DRAM supply chains.
• Supply Stability Highlights:
   
  • DDR4/DDR5: Some Constraints
  • HBM:  Some Constraints
  • DDR3: There are few constraints but some available production options.
  • Legacy (SDRAM, DDR1, DDR2):  Stable, look to 2nd tier for support.

MARKET DYNAMICS

• China’s CAC has excluded using Micron products for critical information infrastructure. Nothing more has been reported to date. Micron's position remains "business as usual." Follow GCM Alerts for more information as it becomes available.
• Analysts predict market stabilization through 2024 with limited bit growth, but AI (HBM) and 5G are gradually rising. However, uncertainty remains in the market, and factories now report shorter lead times and increased product availability.
• Demand in 2024 is lower than the production rate (except HBM). Lead times are currently normalizing.
• Suppliers are reporting available capacity in DDR3. Look for support from most suppliers as deals can be made.
• DDR4/DDR5 pricing is expected to increase throughout the year as suppliers aim for profitability, with potential increases of up to 40%.
• The bit crossover from DDR4 to DDR5 is happening now. Manufacturers are prioritizing most capacity increases for HBM production for AI applications, which could potentially limit the supply of server DDR4/DDR5.
• PC and server demand continues to normalize, and smartphone demand has started to increase.
• Look for and take advantage of short-term spot-market lower pricing opportunities and oversupply situations.

PRICE

• Demand from key sectors such as mobile devices, PCs, and data centers influences DRAM prices significantly. While the mobile sector's rising demand has somewhat stabilized prices due to its consistent growth, shifts in other sectors can lead to price volatility​.
• The prices for both DDR4 and DDR5 have been projected to increase throughout 2024. This trend is driven by a mix of sustained demand and strategic production adjustments by manufacturers, aiming to balance supply with the ongoing high demand, especially for DDR5, as the industry gradually pivots towards newer technologies. Additionally, cuts to capital expenditures (CAPEX) and wafer starts implemented in 2023 are contributing to the constrained supply, further pressuring DDR4 prices even as DDR5 becomes more prominent.
• Like DDR5, HBM is expected to see price increases. This is attributed to its growing penetration in the market, driven by its use in high-performance applications. As HBM becomes more integral in various technological advancements, its demand is likely to outpace the supply, contributing to the rising price trend​
• DDR3 and Legacy DRAM prices are showing a downward trend. This is primarily due to its aging technology and decreasing demand as more systems upgrade to newer memory types. High inventory levels also contribute to this decreasing price trend​.
• Price Stability Highlights:
   
  • DDR4/DDR5: Expect increases through CY24.
  • HBM:  Expect increases through CY24.
  • DDR3: Some decreasing
  • Legacy:  Some decreasing

SUPPLY

• Supply for Asynchronous and Synchronous SRAM (including Low Power, Fast SRAM, Slow SRAM, and Quad Data Rate) remains stable.
• Resilience in global supply chains ensures continuous supply despite geopolitical tensions and logistical disruptions.
• Adopting advanced supply chain management technologies improves risk management and maintains steady supply levels.
• Regulatory compliance, especially in environmental standards, stabilizes sourcing practices.
• Mature technology with fewer innovations leads to less volatility in supply.
• Effective long-term contracts and hedging strategies help insulate against market fluctuations.
• Supply Stability Highlights:
   
  • 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 marketplace today.
• Balanced market conditions are expected to continue throughout CY24. 
• Expect lead times to stay extended due to increased orders from suppliers.
• Look to second tier suppliers to help on first tier constrained suppliers.

PRICE

• SRAM prices remain stable across both Asynchronous and Synchronous categories.
• Balanced supply and demand dynamics prevent significant price fluctuations.
• Technological maturity of SRAM lessens the impact of innovation-driven cost changes.
• Proactive compliance with new regulations mitigates sudden cost increases, helping maintain stable prices.
• Pricing Stability Highlights:
   
  • Asynchronous: Stable
  • Synchronous: Stable

This applies to NAND Flash derivative products such as Solid-State Drives, eMMC, Memory Cards and USB Drives

SUPPLY

• There is an increased demand for NAND Flash due to its use in various applications such as SSDs, smartphones, and data centers, which is putting further pressure on the limited supply.
• 3D NAND manufacturing is significantly more complex than Planar NAND, involving multiple layers of memory cells stacked vertically. This complexity can lead to yield issues and production delays.
• Supply Stability Highlights:
   
  • Planar NAND: Some Constraints
  • 3D NAND Flash: Some Constraints

MARKET DYNAMICS

• China’s CAC has excluded using Micron products for Critical Information Infrastructure in China. No further information has been reported to date. Micron’s position remains "Business as Usual." Follow GCM Alerts for updates as more information becomes available.
• Expect ASP (Average Selling 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 oversupply pricing, and spot market opportunities where applicable.
• Major suppliers are trying to push prices higher on high-density Flash and high-density SSDs. Push back or involve GCM for assistance. Look for support from second-tier suppliers if possible.
• Hyperscalers, AI, Mobile, and PC sectors are looking to buy ahead as market recovery improves.
• Short-term demand will increase in 2024, with higher pricing expected for the second half due to supply and demand dynamics. To ensure supply, provide suppliers with as much forecast information and firm orders as possible.

PRICE

• The demand for higher capacity storage solutions, especially from data centers and consumer electronics sectors, drives the price of 3D NAND flash memory upwards.
• Planar NAND is expected to see a price increase due to reduced production and the niche markets still requiring this technology.
• For 3D NAND, achieving economies of scale is essential to reducing per-unit costs. Until such scales are achieved, prices may remain high.
• Pricing Stability Highlights:
   
  • Planar NAND: Increasing
  • 3D NAND Flash: Increasing

SUPPLY

• There's a growing demand for NOR Flash memory across various industries, including automotive and industrial applications, where it's essential for storage in environments requiring extended temperature ranges and high reliability.
• The industry is seeing a slower transition in the technology used for NOR Flash production, which affects the ability to meet the quick pace of demand from new tech applications.
• Supply Stability Highlights:
   
  • Low-Mid Density NOR:  Some Constraints
  • High Density NOR: Some Constraints

MARKET DYNAMICS

• China’s CAC has excluded using Micron products for critical information infrastructure in China. Nothing more has been reported to date. Micron’s position remains "Business as Usual." Follow SCM updates for more information.
• NOR Flash memory is anticipated to remain tight through 2024.
• The rising popularity of true wireless products is increasing demand for NOR Flash memory, a trend expected to continue through 2024. This, coupled with 5G product introductions and AI applications, could make supply tight. Stay current with market issues.
• NOR Flash foundry partners also see increased demand for non-memory products that yield higher margins, limiting NOR Flash's capacity expansion plans.
• Look for second-tier suppliers for support. GCM can help with alternatives.

PRICE

• Despite the constraints in supply, the current market demand aligns well with available supply, helping to keep prices stable.
• Manufacturers and suppliers are expected to manage inventories strategically to prevent sudden price fluctuations and ensure a stable pricing environment even amidst potential supply constraints.
• Pricing Stability Highlights:
   
  • Low-Mid Density NOR: Flat
  • High Density NOR: Flat

SUPPLY

• EEPROM is a well-established technology with mature manufacturing processes, leading to a stable supply chain.
• Unlike newer memory technologies, the demand for EEPROM is stable, serving specific niches such as automotive, industrial, and consumer electronics without significant fluctuations.
• Supply Stability: Stable

MARKET DYNAMICS

• EEPROM is a mature memory technology.
• There is stable demand and a supply base supporting the marketplace today.
• Balanced market conditions are expected to continue throughout 2024.
• Make sure to monitor lead times and provide ample forecasts.
• Major suppliers are normalizing lead times and have sufficient capacity. Also, consider second-tier suppliers for additional support.

PRICE

• There's no sudden increase in demand or drastic changes in supply conditions, which often contribute to price volatility in other semiconductor areas.
• Manufacturers’ strategic stock management practices prevent sudden price fluctuations.
• The mature nature of EEPROM technology leads to fewer sudden innovations or changes, contributing to price stability.
• Price Stability: Stable

SUPPLY

• Increasing demand for high-performance storage solutions in data centers and enterprise settings contributes to supply constraints.
• As SSD technology evolves, especially with newer interfaces and faster data transfer rates, manufacturers face challenges scaling up production without creating bottlenecks.
• Supply Stability: Constrained

MARKET DYNAMIC

• China’s CAC has excluded using Micron products for critical information infrastructure. There are no updates currently. Micron’s position remains "Business as Usual." Follow GCM updates for more information.
• SSD growth 2024 for automotive applications is expected to outperform previous years.
• Production and CAPEX cuts over the past year have significantly impacted supply, and pricing continues to trend higher.
• Very high capacity (30TB-60TB) QLC server SSDs have garnered significant attention in AI applications, with manufacturers noting sold-out conditions two quarters in advance.
• Growth in Half-Height, Half-Length (HHHL) form factors is also expected to increase in 2024, as these provide better performance.
• PCIe SSDs offer higher performance and reduced latency.
• Demand for SSDs (both client and enterprise) is rapidly increasing with the growth of emerging cloud platforms.
• Currently, SSD costs are still higher than HDD, but 3D NAND Flash costs are changing dramatically in 2024.
• Look for suppliers offering short-term deals and take advantage of favorable pricing.

PRICE

• Fluctuations in the cost of NAND flash, a primary component, are driving up SSD prices.
• Price Stability: Increasing throughout 2024

SUPPLY

• Supply is stable as the investment in wafer capacity to support the automotive market has been operationalized.
• Suppliers focus on developing new products for automotive, IoT, and automation applications with advanced technology. New capacity is coming online to meet market growth in these areas.
• Continuous product launches and technological upgrades are driving overall sensor market growth. The trimming of legacy components from product portfolios is ongoing. We must remain aware and sensitive to suppliers' EOL (End of Life) strategies and notice periods.

MARKET DYNAMICS

• Suppliers are shifting market focus from EV applications to industrial and AI-related products to diversify risk from a weaker EV outlook.
• Emerging market applications, including smart wearable devices like fitness and activity trackers, smartwatches, smart bands, and AR/VR headsets, will integrate advanced technologies such as artificial intelligence (AI) and the Internet of Things (IoT). These applications will require a significant number of sensors. Overall sensor market growth will be substantial as AI use cases increase.

PRICE

• Pricing is stable as market demand remains muted due to the current global economic situation. Suppliers remain conservative as the market trend for the second half 2024 is uncertain.
• Inventory levels in the supply chain remain healthy, so component pricing is stable.
• Raw material, foundry costs, and freight terms are increasing.
• Suppliers are under financial pressure to maintain business and gross margins. Prices may increase by the end of the year or early 2025.

SUPPLY

• Most suppliers' capacity utilization is below 80%, and the book-to-bill ratio is, on average, less than 1.0. A market correction impacting revenue and shipped units is underway and will continue through 2024.
• Lead times continue to reduce gradually: 70% of products have lead times of 12 to 25 weeks, 25% have 26 to 35 weeks, and 5% have 36 to 52 weeks. Most Timing IC suppliers have improved flexibility, as seen in their CW/RW terms.
• ST recently revised its CW/RW terms to four weeks in Q1 2024.
• Microchip has suspended the PSP program. New orders will not be flagged PSP and will be managed under standard T&Cs. Existing orders flagged under PSP will remain under PSP conditions.
• Texas Instruments' lead times are quoted at eight to 12 weeks.
• ADI has increased allocations at external fabs. Queue times have reduced, and assembly constraints have been largely eliminated. Test constraints have improved, though some challenges remain for legacy Linear Tech devices. Lead-frame and laminate material shortages have also been resolved. 80% of the portfolio has lead times of less than 13 weeks. ADI plans a USD 1 billion upgrade to its Oregon plant.
• NXP is optimistic about the automotive parts market, with steady growth in their order book. NXP is considering increasing its investment in the Indian semiconductor market.
• ST plans to invest USD 4 billion to increase wafer production capacity. ST projects that the automotive and industrial sectors will grow significantly more than average, by 10.9% and 7.1%, respectively.

MARKET DYNAMICS

• Demand trends from automotive and core industrial customers are resilient, but supply constraints have prevented them from growing at their desired rate.
• The automotive electronics segment is expected 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. Timing ICs are used in engine management systems, safety features, and infotainment systems. The average semiconductor content per vehicle is projected to increase from USD 712 in 2022 to USD 931 in 2025.
• The historically cyclical and recently challenged semiconductor industry is poised for a rebound in late 2024, with generative AI driving growth amidst geopolitical complexities. The sector anticipates a resurgence in chip sales, driven by innovative AI applications and increased demand across key market segments, despite potential headwinds.
• The rise of the Internet of Things (IoT) and other connected technologies is also driving growth in the industry, as these applications typically require high-precision timing solutions. With the increased demand for these electronic devices, the market for Timing ICs is on an upward trajectory.

PRICE

• No price movement is expected from most Timing IC suppliers through the remainder of 2024, as their pricing levels remain firm. Delivery and prices tend to stabilize, except for automotive-grade and application-specific semiconductors, which remain relatively high.
• Demand from the enterprise, data center, and automotive sectors is holding up, so there is little incentive to reduce prices. Suppliers are not aggressive in trading cost reductions for market share.
• ADI and Renesas have indicated that price increases will occur on legacy parts due to higher cost structures and low production levels driven by limited demand.