Semiconductor market’s slowdown continues slide

The second quarter of 2022 was the third consecutive quarter of weaker revenue growth for the semiconductor market, with the market now declining, according to Omdia’s Competitive Landscape Tracker. Revenue for the second quarter of 2022 declined 1.9% from $161.2 billion in the first quarter to $158.1 billion in the second quarter of ’22. This decline follows the longest sustained streak of semiconductor growth of eight straight quarters.

“The recent decline in semiconductor sales has resulted in the second quarter of 2022 being recorded as the third-worst Q2 in 20 years that Omdia has tracked the market,” said Cliff Leimbach, senior research analyst at Omdia. “The changes come after an unprecedented surge in demand from home office and education-from-home activities. Given the cyclical nature of the semiconductor market, we expect the remainder of 2022 and potentially the first half of 2023 to be an adjustment period as the market returns to normal.”

Source: Competitive Landscape Tracker by Omdia

One factor contributing to the current semiconductor decline is Intel’s performance in 2Q22 and a 13% decline in its microprocessor (MPU) business in 1Q. This drop in a market that accounts for over 10% of the entire semiconductor market has dragged the entire market down.

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In addition, the US dollar appreciated against many foreign currencies in 2Q22 versus 1Q22. Companies that report sales in foreign currencies saw sales decrease when converted to US dollars. Some non-US based companies reported quarterly sales growth in local currency terms but negative quarterly sales growth from a US dollar perspective. Collectively, these factors have exerted a downward impact on overall semiconductor market earnings in US dollars.

Source: Competitive Landscape Tracker by Omdia

A review of the performance of leading semiconductor companies revealed that Intel and NVIDIA’s combined decline in Q2 2022 was $3.7 billion; a result of weak consumer demand for their products and OEMs holding less inventory during these uncertain times. The only other top ten company by revenue that declined in 2Q22 was Qualcomm. The remaining companies increased their sales during the quarter.

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The memory market grew slightly over 1% in the second quarter. Samsung is the number one DRAM and NAND company. This, combined with Intel’s results, cemented Samsung as the top-selling semiconductor company.

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