TAIPEI (Taiwan News) — Semiconductor analysts are reporting inventories of non-Apple products have been higher than expected, indicating the integrated circuit (IC) industry may experience a slower than expected peak in the third quarter, per UDN.
Apple is reported to be accelerating an inventory clearout, squeezing non-Apple products. Typically, the electronics industry slows to its lowest levels in May and June, before undertaking a rebound in the second-half of the year.
However, inflationary pressure is continuing to weaken global consumption, leading many in the IC industry to lower expectations. Now, analysts fear domestic front-line IC design firms such as MediaTek (2454), Novatek (3034), Realtek (2379), will bear the brunt of the slowdown.
MediaTek is expected to hold an investor meeting this Friday (April 28), which will be eagerly followed by many in the industry. The company is expected to address difficulties in the IC design industry which first came to light when TSMC's revised full-year outlook at an investors meeting on April 20.
TSMC noted that the economic recession had led to weakened market demand with IC design inventory continuing to increase in the fourth quarter of 2022 with post-COVID recovery slower than expected in China.
Due to weak market demand and high inventory depletion, TSMC believes IC design and semiconductor inventory adjustments will take longer than expected, and may not be correctly rebalanced until the third quarter of 2023.
Industry sources warned a poor economic outlook is causing non-Apple IC design factories to turn cautious in March. To digest inventory, IC design factories have tried to stimulate shipments and control new inventory.
With the arrival of the traditional 3Q peak season, many fear it’s a foregone conclusion that the IC design industry will not be prosperous in the third quarter. Supply chain partners note a slight rebound in ICs driving small and large sized panels, though they are unsure if such conditions will continue into the second half of 2023.
From TSMC’s point of view, growth in the second half of this year depends on major customers such as Apple, but for other Taiwanese IC design manufacturers, high inventory levels of non-Apple mobile phones and price competition will be difficult challenges for them to overcome.
