45% of Semiconductor Companies "Will Reduce Investment This Year"... Companies Tighten Wallets (Comprehensive)

Semiconductor Export Companies Announce Investment Cuts
Memory Followed by Foundry Market Size Also ↓
Last Year's Top Market Revenue Was Samsung Electronics

[Asia Economy Reporters Kim Pyeonghwa, Park Seonmi, Moon Chaeseok] The semiconductor downturn that began in earnest last year continues into this year. Not only the memory semiconductors, which are highly sensitive to economic cycles, but also the foundry (semiconductor contract manufacturing) industry, which was relatively less affected, is expected to experience negative growth. Facing an unprecedented cold wave, the semiconductor industry is shrinking by reducing investments this year.

[Image source=Pixabay]

Semiconductor Export Companies Reduce Domestic and Overseas Investments

On the 19th, the Korea International Trade Association's International Trade and Commerce Research Institute released the report "Export Companies' Business Environment Outlook for 2023." The report contains survey results from 1,327 companies that recorded export performance exceeding $500,000 in 2021.

The International Trade and Commerce Research Institute asked the surveyed companies about their planned investment scale this year compared to last year. As a result, semiconductor export companies showed the highest proportion of domestic investment reduction at 45.2%, compared to other product categories. The response indicating plans to reduce overseas investments this year was also the most prominent at 45.2%.

Among semiconductor export companies, 53.7% expected exports to China to decrease this year. This proportion was higher than other product categories forecasting a decline in exports to China, such as chemical industrial products (47.1%) and plastic and rubber products (46.8%). This indicates that exports to major countries, which account for the largest share of domestic semiconductor exports, are expected to decline.

Global Foundry Market Size Including This Year's Forecast /
[Image provided by TrendForce]

Even Foundries... Semiconductor Market Remains Frozen This Year

The reason semiconductor companies are reducing domestic and overseas investments and anticipating a decline in exports to major countries this year is related to the semiconductor market conditions. This year, as demand decreases across the semiconductor market, the market is expected to shrink not only in memory but also in system semiconductors.

In fact, market research firm Gartner predicted that the global semiconductor market revenue this year could decrease by 3.6% to $596 billion compared to the previous year. Especially, the memory market, which is highly affected by economic conditions, is forecasted by the World Semiconductor Trade Statistics (WSTS) to shrink by 17% compared to last year.

The foundry market, which was considered relatively stable in demand, is also facing a crisis. Market research firm TrendForce predicted that the global foundry market revenue will decrease by 4% compared to last year. TrendForce forecasted that customer order demand will decline across all processes, including mature and advanced (cutting-edge) processes.

Last year's global foundry market size and market share by company / [Image source=Gartner]

Samsung Electronics Ranked No. 1 in Semiconductor Market Last Year

The semiconductor market downturn began in earnest last year. Gartner announced that the global semiconductor market revenue last year was $601.694 billion, marking only a 1.1% increase compared to the previous year. In particular, the memory sector, which is the focus of the domestic semiconductor industry, saw a significant decline with sales dropping by 10%.

Andrew Norwood, a Gartner analyst, explained, "In the second half of last year, inflation, interest rate hikes, rising energy costs, and China's continued COVID-19 lockdowns led to a slowdown in global economic growth. PC and smartphone demand decreased, and companies cut spending due to the economic recession, which impacted the entire semiconductor market."

Meanwhile, Samsung Electronics ranked first in the global semiconductor market by sales last year. It maintained the top position for two consecutive years following 2021, capturing a market share of 10.9%. Following Samsung were ▲Intel (9.7%) ▲SK Hynix (6.0%) ▲Qualcomm (5.8%) ▲Micron (4.6%). However, this statistic excludes foundry companies without their own brands, such as Taiwan's TSMC.

This content was produced with the assistance of AI translation services.