Chip Packaging & Packing Bounce in 2024 Q1-cover tape|carrier tapes|NEXTECK

Chip Packaging & Packing Bounce in 2024 Q1

The infamously cyclical semiconductor industry had a challenging year in 2023, with sales expected to be down 9.4% (to USD 520 billion) for the year. But that’s not as bad as was expected in the spring; before a relatively stronger second and third quarters were in the books, the previous forecast had been for USD 515 billion. 2024 is now predicted to see global sales of USD 588 billion. Not only would that be 13% better than 2023, but it’s 2.5% higher than 2022’s record industry revenues of USD 574 billion.

The market is expected to get almost all of that back in 2024, with sales expected to reach 2022 levels. If we exclude memory, the rest of the industry was down in 2023, but only by about 3%.

In terms of end markets, both PC and smartphone sales are expected to grow 4% in 2024, after 2023 declines of 14% and 3.5%, respectively. Returning to growth for these two end markets is likely important for the semiconductor industry: In 2022, communication and computer chip sales (which include data center chips) made up 56% of overall semiconductor sales for the year.

The 2 other important measures of the industry’s health are inventories and fab utilization. As of fall 2023, inventories remained high at more than $60 billion, about the same level as the previous year. And the process of drawing those down will be a significant headwind for sales in the first half of 2024. In addition, utilization was high during the recent shortage (in the mid-90% range) and is expected to fall below 70% in Q4 2023. The industry likely needs utilization to be much higher than that to be profitable, which could take some time.

Nexteck Singapore and our SEA partners have sensed the incoming PO for WLCSP carrier tape and precision cover tape at 2024 kickoff.

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