The current state of the semiconductor industry: Excess inventory

Although the semiconductor industry is thriving at present, the semiconductor industry is also facing some problems, the most prominent problem is excess inventory.

Semiconductor industry status

Semiconductor production increased during the pandemic, and the realignment and reallocation of basic products caused disruption in the supply chain. As demand for mobile computing devices has multiplied and original equipment manufacturers have increased their forecasts, manufacturers are facing large inventories.

Existing problems of the enterprise:

According to Apple's financial report, the company's inventory for the quarter ending December 31, 2022, was $6.82 billion, an increase of 16.07% from the previous year. In the past few months, Apple's performance has improved dramatically.

HP's 2022 inventory was $5.161 billion, up 14.41 percent from 2021.

Intel's inventory rose to $13.224 billion, up 22.72% from 2021.

AMD's 2022 inventory was $3.771 billion, up 92.89%.

Nvidia's inventory on January 31, 2023 was $5.159 billion, up 98.04% in 12 months,

NXP Semiconductor's 2022 inventory was $1.782 billion, up 49.87% from 2021.

Causes of excess inventory

1. Declining gross profit margin

Both original equipment manufacturers and external electronics manufacturers are suffering from high inventories. The macroeconomic disruption ushered in a fundamentally different environment for the technology supply chain, with total inventory levels increasing by an average of about 27 percent from 2019 to 2022.

2. Distributor inventory increases,

Avnet's CEO told analysts on a recent earnings call that Oems and other end customers are driving orders. But neither distributor has seen any cancellations.

3. The decline in consumer demand and the impact of the epidemic in the past three years have made people develop the habit of waiting, and the demand for various electronic products is not as high as in previous years. According to the performance of 618 this year, the demand for consumer electronics has declined, mainly reflected in the weak demand for mobile phones, computers and other products; The rise in demand for bulk electronic products is mainly reflected in the increase in demand for high-power products such as air conditioners and refrigerators.

Semiconductor Industry Outlook

For the semiconductor industry, the current difficulties are only temporary, the overall development trend is still upward, and the chip development still has a long way to go.

Moreover, with the increasing demand for electric vehicles, driverless vehicles, and charging piles, the road of upgrading and transformation of the semiconductor industry is also gradually developing upward and forward.