16% 2024 semi forecast from Future Horizons

Good news was that the downtown bottomed in Q1, and the better news was it bottomed one quarter earlier than the usual four quarter cycle. “The ultra strong Q2 was an unexpected surprise,” said Penn.

But it’s not as good as it looks. “Discretes are still negative and the only reason the market figures are up is because ASPs have recovered,” said Penn, “it is not the next super-cycle . . .yet. IC unit growth has yet to turn round. The bread and butter products are still languishing.”

In fact, unit shipments are 12.2% below the long-term trend line and Future Horizons thinks  it will be 2 to 3 more quarters before balance is restored.

ASPs are 16% above the pre-recession $1.35 and 42% above the January 2023 low. “The $400 billion, $1.6 ASP IC market is not dominated by $40,000 Nvidia GPUs!” cracked Penn.

Capex is running rampant and, as a percentage of IC sales, peaked in Q1 at the highest level ever recorded.

This is being driven by China. “If you take China out the figures look better, “said Penn, “the non-China capex was cut back in Q2 and looks like it will continue for most of 2024.”

“The Chinese predatory buying behaviour is the most serious red flag the industry faces,” added Penn, “China is on a ‘Buy anything’  splurge which is up 30% on 2022 and 400% on 2012. They’re focusing on mature nodes and buying anything they can get their hands on. I hope it remains uncrated in storage. If not, we have a potential over-supply.”

Such a situation would exacerbate trade attentions, result in protectionism and severely disrupt the industry.