Global Semiconductor Market Status and Future Outlook

2024-07-26

In the second quarter of 2024, the global semiconductor market underwent significant changes, particularly the weak demand in the industrial and automotive sectors, which had a profound impact on the performance of major semiconductor companies such as Texas Instruments (TI) and NXP. Despite the challenges, the emergence of positive signals and companies' optimistic expectations for the future market indicate that the semiconductor industry is expected to achieve stable growth in the future. This article will delve into the current status of the semiconductor market and discuss its future development trends.

I. Weak Demand in Industrial and Automotive Markets Affects Performance

Texas Instruments (TI) reported financial results for the second quarter of 2024, with operating income of $3.822 billion, a year-on-year decrease of 16% and a sequential increase of 4%; net profit was $1.127 billion, a decrease of 35% year-on-year. In terms of business segments, analog business revenue was $2.928 billion, a decrease of 11% year-on-year; embedded business revenue was $615 million, a decrease of 31% year-on-year. Industrial and automotive business continued to decline quarter-on-quarter, while other end markets saw growth. The proportion of industrial market revenue reached 40% in 2023, and the automotive market revenue proportion reached 34% in 2023.

NXP's financial report for the second quarter of 2024 showed operating income of $3.13 billion, a year-on-year decrease of 5%; cumulative income for the first six months of fiscal year 2024 was $6.253 billion, a decrease of 2.60% year-on-year. In the chip business sector, automotive chip operating income was $1.728 billion, a decrease of 7% year-on-year; industrial and IoT chip revenue was $616 million, a year-on-year increase of 7%; mobile chip revenue was $345 million, a year-on-year increase of 21%; communication infrastructure and other product revenue was $438 million, a decrease of 23% year-on-year.

II. Positive Signals in the Semiconductor Industry

Despite the challenges, the semiconductor industry has also shown some positive signals.

First, Texas Instruments' President and CEO Haviv Ilan stated that although the company's operating income decreased by 16% compared to the same period last year, it increased by 4% sequentially, and all other end markets saw growth. Texas Instruments expects operating income for the third quarter of 2024 to be between $3.94 billion and $4.26 billion, continuing the sequential growth.

Second, NXP continues to launch new products. In March 2024, NXP introduced the world's first 5nm MCU with high-efficiency real-time computing cores and high-security cores, designed for the era of software-defined vehicles (SDV). In May, NXP released a new MCX W series MCU supporting multi-protocol wireless connections, suitable for edge sensors and controllers in industrial and IoT applications, as well as smart home devices.

Third, China, as the world's largest semiconductor market, is gradually recovering. After electronics manufacturers reduced unused component inventory, the market basically resumed growth.

III. Performance of Other Related Companies

SMIC: In the first quarter of 2024, SMIC's capacity utilization rate rose to 80.8%, making it the world's third-largest wafer foundry. Huarhong Semiconductor Company achieved sales revenue of $460 million in the first quarter of 2024, a sequential increase of 1.0%, with a gross margin of 6.4%, an increase of 2.4 percentage points sequentially.

Weir Shares: It is expected to achieve a net profit attributable to shareholders of listed company shareholders of about 1.308 billion to 1.408 billion yuan in the first half of 2024, an increase of 754.11% to 819.42% year-on-year. The company's product penetration in the high-end smartphone market and the continuous penetration of autonomous driving applications in the automotive market, while optimizing product and supply chain structures, effectively improved the product gross margin.

Goodix Technology: It is expected to achieve a year-on-year increase of about 11.8% in operating income in the first half of 2024, with a net profit increase of 333.82%. Benefiting from the growth of terminal customer demand, the company's shipments and operating income achieved year-on-year growth.

GigaDevice: It is expected to achieve a net profit attributable to shareholders of listed company shareholders of about 518 million yuan in the first half of 2024, an increase of 54.18% year-on-year. After experiencing the low demand and inventory reduction in the market in 2023, the demand in the consumer and network communication markets in the first half of 2024 has rebounded, driving the growth of the company's storage chip product sales and revenue.

Rockchip: It is expected to achieve a year-on-year increase of 543.15% to 686.29% in net profit in the first half of 2024. With the gradual recovery of market demand, AIoT (AI Internet of Things) is experiencing growth.

IV. Future Market Outlook

In 2024, as the global market's semiconductor product inventory is reduced, industry patterns are integrated, artificial intelligence, XR, and consumer electronics drive the recovery of downstream demand, and the price of storage chips rises, the global semiconductor sales amount is gradually bottoming out and rebounding. The latest data from the Semiconductor Industry Association (SIA) shows that global semiconductor revenue reached $137.7 billion in the first quarter of 2024, a year-on-year increase of 15.2%.

As the world's largest consumer electronics market, with the rapid development of emerging technologies such as the Internet of Things and artificial intelligence, China's demand for semiconductor products is expected to further increase. In the first quarter of 2024, China's semiconductor sales amount increased by 27.4% year-on-year, leading the growth rate in all regions. Mainland China's wafer foundry, advanced packaging, and storage IDM production lines are expected to continue to expand, generating a large demand for semiconductor equipment. The operation of wafer factory production lines requires a large consumption of semiconductor materials and components, promoting the further development of related semiconductor companies.

V. Conclusion

Despite the many challenges currently facing the semiconductor market, the emergence of positive signals and companies' optimistic expectations for the future market indicate that the semiconductor industry is expected to achieve stable growth in the future. Companies need to continue to pay attention to changes in market demand, actively adjust strategies, and launch innovative products to adapt to the constantly changing market environment. At the same time, the recovery of the semiconductor industry will also provide important support for the development of the global economy.

VI. Semiconductor Chip Component

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