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Analog Semiconductor Supply Chain Update - February 2024

Dennis Reed
|  Created: February 23, 2024  |  Updated: July 1, 2024

Analog Semiconductor Supply Chain Update - February 2024

 

Edgewater Research

Note: This is not the full Insights report, if you are interested in receiving the full report, please click here to discuss the requirements.

Key Highlights & Developments:

  • European Market Weakness: Auto semiconductor order cancellations and delays are accelerating in Europe, indicating a sharper downturn for the first quarter.
  • Cost Management in Detroit: The Detroit Big Three automakers are simplifying vehicle features and considering production cuts due to high dealer inventories.
  • Shift in EV Strategy: North American automakers are postponing 20-30% of their 2024 EV projects, pivoting towards hybrid models which require less semiconductor content.
  • Cost Control Measures: Across the supply chain, there's an uptick in cost-saving strategies, including layoffs, signaling caution for 2024's outlook.
  • Persistent Supply Chain Concerns: Monthly observations suggest continued semiconductor demand weakness into the second half of 2024, influenced by high inventory levels and slow order recovery. Key indicators for a potential rebound include order bookings in Asia post-Chinese New Year and from March to May in the West.

Channel Insights:

  1. European Demand Downturn: The first quarter has seen a worsening demand in Europe, dimming early optimism for growth in 2024. The business-to-business (B2B) semiconductor ratio is below the equilibrium, exacerbating supply issues.
  2. Hopes for a Second-Half Recovery: The industry lacks a solid backlog for a predicted recovery in the latter half of 2024, highlighting the need for a significant pickup in bookings soon.
  3. Challenges for Nvidia: Nvidia faces challenges with its current power management integrated circuit (PMIC) suppliers, with no immediate alternatives meeting their requirements. Efforts are ongoing to resolve this bottleneck.

Other Observations:

  • Market Recovery Signs: Slight improvements in B2B orders are noted, but they're still not reaching the desired levels across various sectors.
  • Inventory and Demand Dynamics: Consumer electronics, mobile, and PC inventories are normalizing, yet demand recovery remains sluggish. Automotive and industrial sectors show limited inventory progress.
  • Post-Chinese New Year Orders: A modest uptick in orders, especially in the automotive sector, is crucial for 2024's recovery, amidst aggressive pricing strategies in China's auto market and a potential shift towards commercial-grade semiconductors.

Conclusions:

The analog semiconductor industry is navigating through a phase of high inventory and cautious demand projections for the second half of 2024. Despite stable pricing trends compared to previous downturns, the sector faces pressure that could impact the industry well into 2024. The focus remains on post-Chinese New Year booking trends for clearer recovery indications.

About Author

About Author

Dennis Reed is a Senior Research Analyst in Technology. Dennis started in the industry in 2005 at FTN Midwest Research on the technology & semiconductor team. In 2006, he was a founding member of Cleveland Research Company and continued to develop and extensive network of technology industry professionals in the semiconductor, distribution, memory and HDD industries throughout the world. Dennis worked at KeyBanc Capital markets in New York, on teams covering Consumer Staples and Paper & Packing companies. Dennis also brings wide level of experience working in various roles with Travelers Insurance, including Market Research and various product roles supporting business unit growth in targeted end markets. Dennis is a 2002 graduate of Ohio University with a major in Sports Management.

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