• The semiconductor market continues to go through a shift driven by changing demand and capacity adjustments.
• The supply landscape for semiconductors is gradually shifting towards a more balanced/oversupplied state as demand continues to soften in consumer electronics, PCs, and smartphones.
• This has resulted in adjustments in lead times, with reductions observed in various categories.
• Suppliers are strategically managing their capacity utilization, with the industry operating at 82% utilization in Q3’23 compared to ~90% in the same period in 2022 and 2021. (Source: Omdia Research).
• Automotive and industrial sectors are the exceptions, showing a more positive demand trend. These market dynamics are influenced by the ongoing transition to electric and autonomous vehicles, which is driving growth in the automotive sector.
• Automotive semiconductor manufacturers are investing heavily in silicon carbide (SiC) technology to meet the anticipated surge in demand.
• Healthcare applications also continue to be a stable growth driver.
• Conversely, segments like consumer electronics are experiencing stagnation in demand, prompting cautious forecasting and inventory management.
• The pricing environment in the semiconductor industry reflects the changing demand dynamics.
• While some segments experience price stabilization due to robust demand in sectors like automotive and industrial, other segments are witnessing more openness to price reviews to maintain market share amid softening demand.
• Suppliers are navigating a delicate balance between price adjustments and securing orders.
• Global geopolitical challenges and market uncertainties are prompting semiconductor suppliers to diversify their supply chains.
• Semiconductor vendors are looking to diversify manufacturing capacity across multiple geographic regions in response to customers’ concerns around regulatory changes and geopolitical tensions.
• Examples of such actions include qualifying additional foundry partners at 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 market and economy continue to fluctuate, and decline driven by weakening demand and idle capacity. Most supplier capacity utilization rates are <80% and book-to-bill ratio <1.0.  There are significant lead-time reductions with most suppliers and technologies, apart from certain golden screw devices in the automotive space.
• There are also inventory corrections within the OEM/EMS and distribution channel to avoid more carrying costs and liability.  Suppliers are aggressively looking to secure market share to keep production lines running. 
• Suppliers anticipate that the automotive and industrial sectors will continue to grow in 2024, but at a slightly slower rate.

 

Texas Instruments

• 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 volume expected as early as 2026.
• This additional capacity is welcomed after a rollercoaster 3 years of instability.
• The new fab will be located next to their existing fab and they 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 under construction in Sherman, Texas.
• We do see significant lead time improvement for non-critical devices back to 12~20 weeks except for automotive devices which remain constrained.
• 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 and custom products remain at 26 weeks. 
• If any product is quoted at greater than 26 weeks, please follow MCHP’s latest lead time.
• Microchip offered additional flexibility for new orders under PSP as of August 1st.
• Existing PSP backlog remains unchanged.
• Rolling backlogs from 9 months to 6 months.
• MCHP continues to allow clients to split orders for a specific device, between PSP and non-PSP.
• MCHP added flexibility to cancel or reschedule orders if MCHP’s confirmation date is greater than 6 months and clients may 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 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 and any existing backlogs with a ship date from 1/1/2024 onwards.
• Lead times in the range of 37 weeks ~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 and power products to 18-24 weeks. These new lead times are effective July 15, 2023. 

Diodes

• Overall, demand from the personal electronics, communication, enterprise, and industrial markets are projecting down with the exception of automotive, for which they are still seeing very strong demand.
• Lead times have improved to 12-20 weeks.

ADI

• 76% 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.
• ADI will continue to monitor the supply and update lead times as appropriate.

 

Foundry/OSAT update

• Some investments for growth in 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 are being discussed.
• Long-term agreement with OSAT partner. Co-investment with lead frame and laminate suppliers.

 

 

PRICE

• In response to the market downturn, companies are aggressively looking to secure more market share and keep their book-to-bill ratio > 1.0.
• For standard commodities, we do see some pricing relief due to inventory levels - there is a potential for distribution to sell off excess inventory into the open market and erode the market price.
• For high-performance analog products, pricing will remain flat.
• A lot of annual contract pricing will expire by the end of 2023; should suppliers continue to see weakening demand through 2024 forecasts then reductions may be offered.
• We need to continue to monitor the inventory levels and price trends for the 1st half of 2024.
• Renesas: Flat
• Onsemi: Flat.
• ADI: Flat
• STM: Flat
• Diodes: Some reductions
• TI: Some reductions
• Future price developments are directly linked to each supplier’s capacity status which requires continuous monitoring.

MARKET DYNAMICS

• With the current pandemic and geopolitical conflicts, there is a trend of suppliers expanding and diversifying their supply chains to multiple geographic regions, such as Malaysia, Vietnam, India, and the Philippines as customers evaluate supply from outside of China.
• 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 (new products), 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 semiconductor content per vehicle increasing in line with the transition to electric and autonomous vehicles.
• Analog devices invests in 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.

SUPPLY

• The market continues to trend towards a healthier supply landscape as demand for semiconductors, especially in consumer, PC, and smartphone end markets softens. Lead times have been adjusting down for standard logic, now 6-12 weeks depending on the package.
• From the perspective of segmented applications, the delivery and prices have stabilized with the exception of automotive-grade and application-specific semiconductors which are still relatively high. 
• Visible orders are decreasing, prices have returned to normal, and deliveries have eased. Most logic suppliers have advised that lead times have stabilized due to inventory availability.
• Most suppliers' capacity utilization is < 80% and book-to-bill ratio of < 1.0. Automotive and industrial demand will continue to grow in 2024 but at a slower rate as compared to 2023.
• Foundry utilization continues to fall through 2023. OSAT (outsourced semiconductor assembly and test) manufacturers are seeing an 80% ~ 90% capacity utilization rate and a decline in the order book. In general, book-to-bill ratios are now less than 1.0. Global POS sales have been declining over the last 2 quarters for key logic suppliers.
• Texas Instruments has significant LT improvement with the exception of automotive devices.
• Texas Instruments:
  • Logic: 6 weeks
  • Analog power/signal chain: 8-16 weeks
  • Timing: 8-12 weeks
  • Isolation devices: 20 weeks.
• TI’s new capacity continues to come online. 
• Nexperia advised 6-8 weeks (except for EOL packages), no allocation on Pico Gates Logic.
• New capacity planned amidst a historic chip shortage will gradually come online through the balance of 2023 and 2024 for TI and Nexperia.
• ONSEMI plans a transfer of the standard logic portfolio manufactured at Tower Semiconductor to Vanguard Semiconductor (Taiwan); and 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 8% and 10% for industrial and automotive respectively, both segments are primary contributors to 80% of revenue and continue to be a key growth focus.

MARKET DYNAMICS

• Intel Corp scrapped its $5.4 billion deal to buy Israeli contract chipmaker Tower Semiconductor Ltd after their merger agreement expired without regulatory approval from China. Intel, which had decided to buy Tower last year, will pay a termination fee of $353 million to the latter, the company said in a statement.
• Wafer demand in 2023 is 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 increases due to the transition to electric and autonomous vehicles.  Automotive and industrial demands will continue to grow in 2024 but at a slower rate as compared to 2023.
• 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) of China are coming into the logic supply landscape offering competitive pricing.

PRICE

• The orders, demand, and prices of consumer materials continue to fall whilst automotive and industrial materials have tended to be stable.
• Suppliers are more open to price reviews in order to gain share due to softening demand in some sectors.
• Texas Instruments and Nexperia are pricing to win more shares due to declining demands.
• ONSEMI stays flat on pricing and believes that the LTSA (long term support agreement) is holding firm for the supply/demand on logic.
• Microchip imposed a price increase effective 1st March 2023; this affects emitter-coupled logic (ECL).
• We need to keep a close watch on demand for some end markets as the cuts made to production may be too deep and could eventually create a problem should demand bounce back.

SUPPLY

• Mixed signals are seen in the automotive market as the market correction is finally reaching the automotive market.
• The slowdown in some automotive demand is allowing the allocation situation for automotive discrete parts to improve.
• With this improvement, the lead time for automotive-grade parts has reduced slightly.
• However, suppliers are still going full force in their expansion especially in the SiC mosfet technology in order to prepare for the anticipated increase in demand from the market generated by shifting from an internal combustion engine (ICE) car to an electric vehicle (EV).
• 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: 24-30 weeks
  • High voltage mosfet: 45 weeks
  • Sic: 39 – 40 weeks
  • Automotive mosfet: 45 weeks (allocation)
• Infineon lead times continue to improve however more than 50% of their part numbers are still quoted at over 35 weeks. Infineon is estimating 31% CAGR for SiC, 52% CAGR for GaN, and 4% CAGR for Si discrete products in the span of 5 years.

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 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 continues to expand its LTSA customer pools with new customers such as Vitesco, ZEEKR, and Borg Warner on SiC (Onsemi quarterly release presentation).
• Capacity utilization is around 70% with demand softening and new 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.
• 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 book-to-bill is still slightly above 1 for non-automotive parts despite the slowdown in demand. Automotive segment booking remains strong. Lead time for IGBT and IPM remains above 52 weeks.

Front End

• Catania 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 below 1. For mosfet, the book-to-bill is also below 1.
• Lead time for rectifier continues to improve and more than 60% of the MPN are below 25 weeks. Transistor and mosfet lead time trends are also improving.
• To increase capacity for mosfet, Vishay is moving some automotive MPN and non-automotive MPN to an external sub-con – Tower – utilizing fabs 2 and 9. This will significantly improve the lead time for those MPNs from more than 52 weeks to 26 weeks.
• LVM 60-100 V also will move to FAB 2 from their super-constrained fab in Germany.
• 80% of Nexperia‘s part number’s lead time falls below 12 weeks. Nexperia’s inventory also dropped to 3-4 months from more than 4 months the previous quarter.
• Lingang fab is estimated to end the first trial production for automotive parts at the end of 2023.
• 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.
• 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

• China’s broader economic slowdown is directly or indirectly caused by the liquidity crisis of top property developers.
• The slowdown is worsened by China’s exports which plunged 14.7% in July when compared to a year ago.
• Any potential deflationary impacts upon China due to this phenomenon are unlikely to continue as core inflation remains.
• SiC remains the area of focus for the majority of the supplier such as Wolfspeed, Infineon, STM, Onsemi, ROHM etc. are rushing to expand their SiC capacity.
• This is due to anticipated increased demand from a few major markets that will have high usage of SiC in the next 5 years:
  • EV market and supporting infrastructure.
  • Renewable energy generation applications. such as solar panels and wind turbines.
  • Power grid upgrading
  • Industrial
• With the geopolitical tensions and ban on certain AI-related technology we have seen more suppliers pursue a China+1 strategy. More suppliers are establishing new backend facilities in SE Asia as their supply mitigation plan.
• Outsourcing of the backend has also increased with Amkor, ASE, Carsem etc. seeing new opportunities.

PRICE

• Price is trending slightly down for non-automotive parts, with the softening of the market suppliers are more willing to discuss pricing.
• For the automotive space, mosfet and diode prices remain flat as capacity is still constrained.

SUPPLY

• The supply is normal from most manufacturers of opto couplers, infrared (IR) devices and optical sensors.  
• Japanese manufacturers such as Toshiba and Panasonic have some constraints on opto couplers and solid state-related SSR products.  
• Some automotive SSR products from Panasonic are now on allocation. 
• Demand for automotive has slowed but supply has still not caught up causing the allocation.
• Tier 1 manufacturers’ lead times continue to drop from a high level due to the market softening.  They are currently at 15-28 weeks level while the Asian brand will maintain at 8-16 weeks. 
• OnSemi’s lead time has dropped from a high level, but they remain in NCNR status for the moment.
• Most manufacturers are sticking to their cancellation policy as they are still facing numerous customer pushouts or cancellations. 
• Overall capacity utilization is below 80% and the business has dropped around 30%. 
• Single-source semi-customized LED manufacturers, such as Visual Communications Company, Panasonic, Nichia, Dialight, Vishay and KingBright continue to announce EOL of their legacy products.  Customers are advised to work closely with us to qualify Jabil’s preferred suppliers in order to mitigate supply risks.
• Most LED suppliers are looking for new business, especially from growing markets 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 the lead times drop; this is compounded by conservatism on the placement of new POs as companies look to avoid inventory build-up.  

MARKET DYNAMICS

• Most suppliers, especially the Tier 1 brands, are focusing on the automotive or EV market. New products for 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 the company’s competitiveness.  
• Smaller and non-automotive suppliers will face another challenge in the next few quarters if the economy does not pick up as expected.
• OEMs are starting to look for non-China sources. Suppliers are planning to support, but no real action has been taken as the market has slowed down.  

PRICE

• Prices are stable for all product types in Q4’2023. Suppliers are maintaining existing price levels through the end of the year. They are not increasing prices significantly, even if they were impacted by material cost increase. Most suppliers are in reactive mode, seeking just to maintain price levels that will maintain their market share.  
• Price increases continue for EOL and legacy products, as well as selected circuit board indicators (CBI), light pipe, and opto couplers due to rising costs of raw materials.
• Suppliers are willing to review pricing for new opportunities and new demand. 
• Automotive and healthcare sector growth is stable, and customers have reduced the forecast, despite keen competition on new project bidding for 2024. Consumer market demand fell to rock bottom last quarter and should see slight growth through the balance of 2023. 
• Prices are stable as suppliers are depleting inventory and optimistically looking forward to some demand recovery at the end of this year. 

SUPPLY

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

MARKET DYNAMICS

• 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 late 2023 to 1st half of 2024 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 Q4 2023 /Q1 2024. Lead times are currently normalizing.
• Major suppliers are downgrading growth predictions for 1st half of 2024. 
• Suppliers are reporting capacity in DDR3. Look for support from most suppliers as deals can be made.
• The 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 2024.
• Look for, and take advantage of, short-term SPOT-market lower pricing opportunities and over-supply opportunities.

PRICE

• DDR4: Some Decreases.
• 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

• 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 the balance of 2023 and into 2024. Expect lead times to stay extended due to increased orders on suppliers.
• Look to 2nd tier suppliers to help on constrained 1st tier suppliers.

PRICE

• Asynchronous: Stable
• Synchronous: Stable

PRICE

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

MARKET DYNAMICS

• Contamination issues have waned at the joint Western Digital/Kioxia Nand factory impacting up to 6.5 exabytes of flash memory. Production of 3D Nand is normalizing. NAND pricing is lowering but expected to bottom out by Q2 2024.
• Expect short-term pricing reductions in Nand Flash products and related products using Nand Flash (eMMC and SSD’s). Take advantage of over-supply pricing and spot market pricing where applicable. Continue to forecast effectively.
• Watch for major suppliers trying to push pricing higher on high-density flash and high-density SSD. Push back or involve GCM for help.
• 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 impacts arise.
• Short-term demand looks like it will slow in early 2024 and pricing is reflective of this. Give suppliers as much forecast and hard orders as possible to ensure supply.

PRICE

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

SUPPLY

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

 

MARKET DYNAMICS

• NOR Flash memory is anticipated to remain tight through Q2 of 2024.
• The rising popularity of true wireless products increasing demand for NOR flash memory is expected to continue through 2024. Coupled with 5G product introductions 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 is not likely to cause material shortages, but customers need to be vigilant. 

 

PRICE

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

 

SUPPLY

• EEPROM: Stable.

MARKET DYNAMICS

• 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 and into 2024.
• 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.

PRICE

• EEPROM: Stable.

SUPPLY

• Stable/ Few Constraints

MARKET DYNAMICS

• SSD growth for 2023 in automotive applications is expected to outperform previous years.
• Growth in half height, half length (HHHL) is also expected to increase in 2024.  These form factors provide better performance.
• PCle SSDs offer higher performance and reduced latency.
• The demand for SSDs has been rapidly increasing in the emerging number of cloud platforms.
• Presently, SSD costs are still higher than HDD but 3D and flash costs are changing dramatically in 2nd half of 2023 and possibly into Q2 2024.
• Look at suppliers looking for short-term offers. Take advantage of pricing where possible.

PRICE

• Decreasing for 2nd half of 2023

SUPPLY

• Lead times drop below 30 weeks in some categories.  The market continues to be slow-moving except for the automotive and healthcare segments.  
• Demand has not grown as expected as we enter the final quarter of 2023. 
• Mature technology products supply remain stable as market demand is soft - even with no capacity investment on equipment for legacy products. It is time to get current on technology and look to phase out the old design. Situation will remain for the balance of 2023. 
• Top tier global suppliers like Texas, OnSemi, Maxim etc., are stable and are aggressively looking to gain new projects to secure 2024 demand. The demand for sensing products is expected to remain flat through the first half of 2024.
• Sensor manufacturers do not rely on China located facilities. US regulation on the limitation of China as a source does not create a significant impact to sensor supply. We still recommend to diversify and be multi-sourced to avoid any supply chain threat. 

MARKET DYNAMICS

• Automotive electrification and healthcare applications demand has stabilized but remains the major demand source among segments. Suppliers are all focusing on EV-related technology investments.    
• Capacity investment from suppliers tends to focus on innovative products with higher ROI, resulting in older sensing technologies going end-of-life. New capital investment has slowed due to uncertain market situation.
• The request for non-China sources has begun but the majority of suppliers’ product originates from other parts of Asia, Europe, and US. The China-based suppliers are aggressively chasing share by offering better lead times and costs to secure business.   

PRICE

• Pricing is stable as the market has cooled and demand has dropped. Cost reduction may be available for high-volume projects as suppliers look to secure 2024 demand. 
• Texas Instruments is aggressive on new project bidding and offering market-leading pricing for new opportunities in 2024. Prices are unlikely to drop on existing projects.
• Leading semiconductor manufacturers are conservatively reviewing any price change and some legacy products continue to see price increases.

SUPPLY

• Most suppliers' capacity utilization < 80% at book-to-bill ratio < 1.0. Automotive and industrial demands will continue to grow in 2024 but at a slower rate as compared to 2023. A market correction that impacts revenue and unit-to-be-shipped basis is well underway and will continue through 2023. In general, book-to-bill ratio is around 1.0 ~ 1.2 for timing IC products.
• Foundry utilization continues to fall through 2023. OSAT manufacturers are seeing a lower capacity utilization rate and a decline in orders on the book for most of the timing IC suppliers. Automotive and industrial are optimistic about growth in demand, but weak demand continues in consumer products.
• Lead times continue to gradually reduce and now hover between 20 weeks and 30 weeks. Lead times will shorten across chip types and are expected to return to normal levels by late 2023.
• Renesas has removed the Demand Securing Program on 52 weeks / NCNR and allowed adjustments for 2nd half of the 2023 backlog, to ensure the actual demand is provided and understood.
• Microchip - lead times for most products at 39 weeks. There is flexibility to cancel or reschedule orders if the order confirmation date is > 6 months; to keep stability in supply, they have maintained the PSP to deal with supply and demand.
• Texas Instruments - timing 8-12 weeks,  isolation devices 20 weeks, logic 6 weeks, analog power/signal chain 8-16 weeks. Texas Instruments’ second fab in Utah (USA) and the testing plant in Chengdu are in production this year.
• ADI - Increased allocations at external fabs.  Queue times reduced. Assembly constraints were largely eliminated. Test constraints improved, still some challenges for legacy LTC parts. 
• Lead-frame and laminate material shortages were resolved. Steadily reducing. 80% of portfolio lead times <13 weeks. ADI has a plan for a $1B upgrade on the Oregon plant.
• NXP is positive on the automotive parts with soaring demand ordering on the book. NXP is considering increasing investment in the Indian semiconductors market.
• ST plans to invest $4B to increase the wafer production cap. ST projected automotive and industrial will grow significantly more than average, respectively by 10.9% and 7.1%.

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.
• TSMC has recently disclosed that the inventory adjustment activities of the supply chain are extending to the fourth quarter and has cut its sales forecast. There are also rumors about foundry service providers lowering quotations, as well as orders.
• Demand trends from automotive and core industrial customers are very resilient; supply constraints have not allowed them to grow at their desired rate.
• While the consumer space will slow down, semiconductor revenue from the data center market will remain resilient for longer (20% growth in 2022) due to continued cloud infrastructure investment.
• 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 increase from $712 in 2022 to $931 in 2025.
• TSMC, Bosch, Infineon, and NXP establish joint venture to bring advanced semiconductor manufacturing to Europe.

PRICE

• There is no change from most timing IC suppliers through 2H 2023. The pricing levels are still holding firm. From the perspective of segmented applications, the delivery and prices tend to stabilize with the exception of automotive grades and application semiconductors products which are still relatively high. 
• Renesas sent a notification of a price increase effective 1st Jan 2023. Microchip also sent a price increase notification effective 1st March 2023.
• The demand from the enterprise and data center sectors as well as automotive is holding up so there is little incentive to reduce pricing levels.
• Suppliers are not aggressively looking to trade cost reduction for more share.