Market Intelligence
March 27, 2024

CY23 Q4 Earnings Season - Key Takeaways and Common Themes image

Fusion Worldwide's market analysts delve into semiconductor manufacturers' quarterly earnings calls to glean supply and demand trends and insights. This quarter, From the Source's Mouth included over 25 manufacturers, starting with Taiwan Semiconductor Manufacturing Co., the world's largest chip foundry, and concluding with NVIDIA Corporation, the leader in AI technology. 

Based on the earnings calls between January 18th and March 1st, here are the developments shaping the supply chain landscape: 


AI Remains the Biggest Buzzword 

AI was in high demand across industries, with many linking growth projections to this advancing technology.  
  • Nvidia noted that consumer internet companies were among the early adopters of AI. Applications like search engines, e-commerce, social media, and entertainment use AI and machine learning technology.  
  • Automotive, healthcare, and financial services have also found ways to incorporate AI innovations. These sectors utilize applications such as self-driving technology, pharmaceutical discovery, and high-speed machine learning (ML) for detecting fraud or robotics. 
  • Advanced Micro Devices (AMD), a primary competitor in the AI space, is still playing catch-up but is gaining ground with its latest hardware products. New accelerators are being added to the suite and are performing well with cloud providers and major OEMs. The launch will support the world's fastest supercomputer when it becomes operational later this year. 

The widespread adoption of AI has set high expectations for expansion and integration. More demand for AI hardware and semiconductors will lead to more competition among manufacturers to capture market share.  

Memory Market Rebounds Following a Pervasive Decline 

The memory market finally rebounded after a challenging year of declining revenue and demand.  

  • DRAM and NAND costs increased significantly across all manufacturers, with SK Hynix NAND prices rising by over 40%. On top of current demand trends, SK Hynix also forecasted that AI would drive change within the memory market thanks to high-bandwidth memory (HBM) requirements. The possibility of this tailwind will be one to watch amongst the commodity groups associated with HBM. 
  • Samsung forecasts gradual improvement in the first half, with stronger demand in the second half of the year. To align with this trend, Samsung is expanding production capacity for HBM, DDR5, and other advanced nodes. This announcement is a significant shift from last year when the primary strategy focused on reducing production capacity. 
  • TSMC expects the semiconductor market to grow this year but did not give an outlook for the memory market. This hesitancy reflects the pervasive nature of inventory digestion, as excess supply significantly impacted manufacturers and led to more careful forecasting. 

The dynamic nature of the electronic component industry makes it difficult to predict exactly how these trends will take shape, but even if demand slows, prices will continue rising. 

Industries with Low Demand in 2023 Anticipate Increased Sales as Consumers Seek to Upgrade Technology 

  • Western Digital stated that generative AI-driven storage deployments will spark demand for client and consumer devices.  
  • Qorvo and Samsung announced similar trends, with robust demand emerging in wearables. Samsung saw increased demand for smartphones and PCs, which could bring foundry markets back to 2022 revenue levels. 
  • Skyworks mentioned that AI workloads will lead to data center upgrades. Sanmina and SK Hynix also noted this trend in the cloud infrastructure market. 

If AI solutions penetrate the smartphone and personal device markets, the consumer industry will benefit from the wave of customer upgrades as people transition from old devices to new ones. 

Manufacturers Pin Hopes on Automotive Electrification 

The transition from internal combustion engine vehicles to electric vehicles isn't occurring as swiftly as automakers anticipated. However, consumer demand is still robust. The continued demand for EVs is prompting car companies to increase their investment in the research and production of such vehicles.  

  • Renesas stated that even with the demand fluctuations and headwinds impacting the EV market, content growth will continue, and mainstays in automotive demand, like MCUs and SoCs, will stay strong.  
  • Infineon remarked that e-mobility and ADAS market segments are still experiencing robust demand.  
  • Vishay highlighted that there has been an uptick in volume for hybrid vehicle production as customers look for the best of both worlds between internal combustion engines and cleaner energy options.  

While projections indicate that the complete shift to EVs will be gradual, the demand for advanced applications in vehicles will progress rapidly. 

Strategies for Success: From Q1 and Beyond 

Despite a slow transition, increasing automotive electrification fuels strong demand, highlighting the industry's dynamic nature and commitment to innovation. With the added developments in AI integration, memory market rebound, and accelerated growth expected in technology refresh cycles, the upcoming market landscape presents both challenges and opportunities for stakeholders. Harnessing market intelligence for data-driven decision-making, proactive supplier collaboration, and adapting to dynamic market conditions are essential for success in the electronic component supply chain.  

Furthermore, in the current inventory digestion cycle, it is crucial to partner with an independent distributor like Fusion Worldwide to navigate the market effectively. Our detailed analysis, Where Are We in the Inventory Digestion Cycle, delves deeper into the state of excess supply across the electronic component industry. 


Contact us today to learn about our services to get you out in front of risk. 

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