The tech Week that was... Jan 9~13

Welcome to the latest edition of my weekly newsletter bringing you all the key semiconductor and technology news from around the world in one easy read.??

This week we get the first look at the foundry and OSAT results for the full year from Taiwan.?All the top 4 Taiwan foundries reported record annual revenue for 2022, reporting double digit year on year growth.?Leading the pack was TSMC, who reported +43% yoy revenue growth in 2022 to a record US$75billion.?The year ended on a downturn though, with all the foundries mostly showing negative sequential quarterly growth, only TSMC managed a slight 2% sequential quarterly growth in Q4 and all the foundries reported negative sequential monthly revenue growth in December.?A similar but slightly worse story was reported from the OSAT’s with all OSAT’s reporting negative Q4 sequential growth.

TSMC held it’s Q4 earning call this week, giving some insights into the results they announced and providing a forecast for the coming year.?The slowdown in revenue growth was mainly due to a weakness in demand for 7nm technology due to the inventory correction in the consumer and smartphone sectors.?In Q4, 5nm technology accounted for an increased 32% of revenue, whilst 7nm dropped to 22% of total revenue. ?TSMC see that the current weakness in the end year market will continue and result in -14% sequential decrease in revenue in Q1’23 at its midpoint guidance.??For the full year TSMC expects the market to recover in the 2nd half of 2023 and for TSMC to outgrow the market and show a slight growth in 2023, whilst predicting that the industry excluding memory chip suppliers will fall -4% and the pure play foundry market will drop -3% in 2023. In terms of capex TSMC will invest between US$32~36billion, slightly less than the US$36.3billion spent in 2022.?70% of this capex will be used for advanced technology nodes, 20% on specialty technologies and 10% on advanced assembly and testing.

?In market research news...

According to the latest data from WSTS, global semiconductor industry sales were $45.5 billion in November 2022, a decrease of -2.9% compared to the October and -9.2% decline year on year.?“Global semiconductor sales decreased in November, largely due to market cyclicality and macroeconomic headwinds,” said John Neuffer, SIA president and CEO. “Sales into the Americas were up compared to November 2021, while sales into China decreased sharply on a year-to-year basis.”? In addition, WSTS forecasts that annual semiconductor sales will grow +4.4% in 2022 to US$580billion, and then decrease -4% in 2023 to reach US$557billion.

Worldwide PC shipments totalled 65.3 million units in the Q4 2022, a -28.5% decrease year on year, according to preliminary results by Gartner.?This is the largest quarterly shipment decline since Gartner began tracking the PC market in the mid-1990s. For the full year, PC shipments were 286million units in 2022, a -16.2% decline from 2021.?Consumer PC demand dropped to its lowest level in years as many consumers purchased PC’s during the pandemic and with the current economic climate have little incentive to upgrade.?Whilst the enterprise PC market is also impacted by the slowing economy causing buyers to extend lifecycles. Lenovo retained the top PC vendor position with 24% market share from HP.

In other industry news…

Taiwan foundry Powerchip (PSMC) is confirmed that it is in preliminary talks with multiple Indian conglomerates to help build a new chip plant in the country.?Powerchip is looking to invest in India to diversify its operations amid mounting geopolitical tension in Taiwan and looks to take advantage of India subsidies for local chip capacity.

Apple is reported to be developing a homegrown chip to combine cellular modem, Wi-Fi and Bluetooth capabilities in a single component as it continues to insource chip design.?Currently Qualcomm supplies the modem, whilst Broadcom provides Wi-Fi and Bluetooth chips. Initially Apple will replace the cellular modem chip with in house silicon, and then in the next generation combine additional functionality of Wi-Fi and Bluetooth.?However the swap to in house designed silicon has proven problematic with delays reported in the release of the modem chip.

TSMC is considering building a 2nd Fab in Japan once its current new US$8.6 billion JV Fab is completed.?TSMC CEO CC Wei said the Fab is under consideration as long as “demand from customers and the level of government support makes sense.”

Mexico and Canada are being encouraged to enact new policies to capitalise on the US drive to boost domestic semiconductor production, as part of the push to supply key technology components in North America.?This week the 3 countries agreed to better coordinate investment in semiconductor manufacturing across the continent, including identifying chip investment opportunities and critical mineral resources and supporting education in advanced technologies.

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