Market Summary (September 2024)
1. Global Demand Trends
- Current Outlook: The recovery in the analog semiconductor market remains slow, with demand expected to pick up more significantly in 1H25. However, some suppliers and customers are already extending their expectations to 2H25.
- Bookings Status: B2B globally is hovering around a ratio of 1, with China at or slightly above parity, while the US is slightly below. Europe remains notably weaker, with figures firmly below 1.
- Recovery Timeline: 2H24 demand is expected to stay flat to modestly up, but recovery projections are now being pushed to 1H25 and possibly 2H25.
2. Automotive Sector
- Global Auto Demand: Moderate in 2H24, with projections flat or slightly down due to further output cuts and destocking across key markets.
- China: Auto demand is mixed, with signs of inventory adjustments and local competition. Concerns over US restrictions might also lead to some pull-forward demand.
- North America & Europe: Both regions are seeing weaker demand due to additional production cuts and destocking activities. Projections for 2025 remain flat.
3. Semiconductor Supply Chain
- Automotive Semiconductor Demand: Key suppliers such as STMicro, Infineon, and Microchip are experiencing softening demand in China and continued inventory adjustments in other regions. Some customers are reportedly working to reduce their inventory to just 2 weeks.
- Inventory Levels: Inventory remains elevated across several key suppliers, with STMicro reporting some channels holding more than 32 weeks of inventory. Microchip, Onsemi, and Lattice are also facing high inventory levels.
4. Industrial Demand
- Global Perspective: 2H24 demand for industrial components is expected to remain flat overall. Stability is seen in North America, while Europe is showing signs of weakness. Asia, on the other hand, is seeing green shoots of demand.
5. Datacenter and AI Sector
- Datacenter Demand: Continued improvement for the second consecutive month, largely driven by demand for AI servers and traditional infrastructure projects. Key suppliers such as Nvidia have benefited from the AI boom.
- AI Applications: Nvidia’s GPU/Compute revenue for datacenter applications grew 2.5x year-over-year, and its networking revenue for datacenter use cases grew 2x. Major growth contributions came from hyperscalers, with China being a significant growth market.
6. Consumer Electronics
- Demand Softening: 4Q24 consumer demand is projected to be seasonally lower, with shipments declining. Military/Aerospace demand is flattening out, and deceleration is expected in some segments.
7. Nvidia’s Market Adjustments
- Cost Reductions: Nvidia is targeting cost reductions for PMICs in its low- and mid-range gaming cards. The company is shifting towards more discrete solutions, possibly qualifying a third supplier. In contrast, content in its high-end 5000 series is projected to increase compared to prior generations.
8. Inventory and Distribution
- Suppliers Pressing Distribution: STMicro and Diodes are pushing more products into distribution channels, even pulling forward October shipments.
Conclusion
The analog semiconductor market remains in a state of slow recovery, with near-term demand stagnation offset by long-term growth prospects, especially in AI and datacenter sectors. Automotive and industrial segments face continued challenges, largely driven by elevated inventory levels and softened demand, particularly in China, North America, and Europe. The recovery timeline for broader market strength is now being pushed to 2025, with key market participants adjusting their supply strategies to balance the challenges in the global supply chain
