SEMICONDUCTORS SECTOR: GEOPOLITICAL AND CLIMATE CHANGE-RELATED RISKS AT THE HEART OF THE SEMICONDUCTORS SECTOR OUTLOOK







International Conference on Condensed Matter Physics

While having been in the news during the pandemic because of shortages that were hurting supply chains in many client industries worldwide, the semiconductors sector is now facing a rapid decline due to slowing demand for consumer electronics. However, the unprecedented shortages seen in the industry in the last two years, have highlighted the importance of those components in our modern, interconnected and digitised life, and many countries want to gain sovereignty in their production.

Short-term downturn is worsened by a drop in demand for consumer electronics

After a boom and a subsequent global shortage during the pandemic, demand for semiconductors for traditional consumer electronics such as computers, smartphones, gaming tools, etc. has been on the decline recently due to the ongoing consumer confidence crisis and slowdown of the economic activity. What is more, manufacturers of ICT electronics had increased stocks of chips on the back of the supply chain issues until last summer, leaving them well supplied. Sales in memory chips by Samsung, one of the leaders in the segment, registered a correction in Q4 2022. The drop is expected to continue in Q1 2023. As a result, global production adjusted and big producing countries like South Korea have seen their production falling (see graph below). According to World Semiconductor Trade Statistics (WSTS), the global semiconductor market is projected to decline by 4.1% in 2023, driven by the memory segment. The sector’s capital expenditures (CapEx) are expected to take a severe blow this year as a result. On the other hand, we continue to observe shortages of semiconductors for industrial and automotive use. However, they account for a much smaller market than computers, mobiles and consumer electronics.

#SemiconductorSectorRisks #GeopoliticalTensions #ClimateChange #RawMaterialAvailability #CybersecurityThreats #IntellectualPropertyTheft #SustainabilityChallenges #SupplyChainDisruptions #GlobalizationChallenges #RegulatoryCompliance




 

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