[Peace&Chips] Global Semiconductor Executives Say "No Inventory Until 2027"

Recently, positive outlooks have continued regarding the semiconductor market. Thanks to the effects of artificial intelligence (AI) this year, a market recovery trend is expected to fully emerge, accompanied by ongoing announcements of strong performance results from the semiconductor industry. In particular, as expectations arise that the sales scale of the memory semiconductor market, which quickly reflects economic conditions, will surge compared to last year, a green light has appeared for the performance forecasts of Samsung Electronics and SK Hynix.

On the other hand, rather than only looking at rosy prospects, there are opinions that we should examine when the next down cycle will arrive. In the case of semiconductors, it is an industry characterized by cycles where the business conditions improve, then worsen, and then improve again, so even during an up cycle phase, there is a tendency to look ahead to when the next down cycle might occur. Recently, as the cycle fluctuation period has shortened and the ups and downs have become more pronounced, this phenomenon has become more noticeable.

In this situation, a hint to increase market outlook visibility has emerged. The Global Semiconductor Alliance (GSA) released the "2024 Global Semiconductor Industry Outlook" report last month in collaboration with the global accounting and consulting firm KPMG. The report contains the results of a survey conducted in the fourth quarter of last year targeting 172 senior executives from global semiconductor companies. Since these participants are at the core of corporate decision-making, the data can be helpful in forecasting market conditions.

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This report includes a survey that looks at semiconductor demand and supply conditions as well as inventory levels. Since it is common for semiconductor demand to decrease while supply exceeds demand, leading to inventory accumulation in the market and the business conditions entering a down cycle, questions examining this process were included.

In this section, 30% of global executives responded that current semiconductor inventory is excessive. Since the business conditions have not yet fully entered a growth phase, this response proportion was the most prominent. The second highest proportion (19%) was the forecast that "demand will continue to increase due to technology acceleration such as artificial intelligence (AI), and supply and demand will maintain balance."

Regarding this, the report stated, "A significant number of leaders (19%) believe that excess inventory will not occur or that previous excess inventory has already been depleted," adding that "they think new technologies like generative AI and electric vehicles will align the pace of semiconductor demand and supply." It also included an explanation that "only 9% felt this way in last year's survey," indicating a meaningful change in figures.

Additionally, the report mentioned that "opinions that semiconductor inventory will not be excessive from 2024 through 2025 to 2027 are spreading quite consistently." Interpreted inversely, this suggests a forecast that the up cycle could continue for about the next 3 to 4 years. This outlook is similar to past semiconductor cycles, which typically lasted 4 to 5 years.

Meanwhile, the global executives who participated in this survey predicted that the automotive sector will contribute the most to semiconductor revenue generation this year. Following last year, the automotive sector again ranked first. The AI sector, which has become the biggest topic in the industry, was ranked second. Following that, the Internet of Things (IoT), cloud computing and data centers, and wireless communications were ranked in order.

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