Weekly Market News No.4 May 2023
IDTechEx's recent report "AI Chips 2023-2033" highlights the projected compound annual growth rate of 27% for AI hardware at the edge over the next ten years, outpacing the growth rate of AI in the cloud. The report emphasizes that while certain applications of AI at the edge enhance user functionality and become part of the new normal, others are not integral components of a system, and some are only feasible with AI integration.
Analysts focused on AI at the Edge, covering crucial AI technologies like autonomous driving and the current state of the technology landscape. They will also discuss how AI enables new functionalities at the edge, particularly in the smartphone market, and explore the specific requirements for AI hardware deployed in edge computing scenarios.
TECHCET predicts that there will be a rise in revenue for semiconductor precursors, specifically for high-κ metal dielectrics and low-κ dielectrics, during the latter half of 2023. This rebound will follow a period of stagnant growth. Additionally, there are expectations of an increase
Suppliers of NAND flash memory are facing significant challenges as prices continue to plummet, prompting them to take urgent measures to address the situation. One of the key factors contributing to the decline in NAND flash prices is the current oversupply in the market. Major suppliers such as Samsung, SK Hynix, and Micron have expanded their production capacity, resulting in a surplus of NAND flash memory. Furthermore, weak demand has exacerbated the situation, driven by factors such as the global economic slowdown, a decline in the smartphone market, and the growing popularity of alternative storage technologies like solid-state drives (SSDs). As a consequence of oversupply and weak demand, NAND flash prices have experienced a substantial drop, with an average decline of 20% in the fourth quarter of 2022, and further reductions expected in the first quarter of 2023.
The declining prices have inflicted heavy losses on NAND flash suppliers. Samsung's operating profit from its memory business suffered a staggering 69% decrease in the fourth quarter of 2022, while SK Hynix experienced a 52% decline in operating profit during the same period. To mitigate the impact, suppliers are implementing various strategies. These include reducing production capacity, increasing prices, and implementing cost-cutting measures. However, it remains uncertain whether these efforts will be sufficient to halt the downward spiral of NAND flash prices. Nevertheless, suppliers are under significant pressure to act swiftly, as the continued price decline poses a serious threat to their profitability.
According to Bernstein analysts, the correction in the US semiconductor market is projected to continue for another quarter. Intel's expectations for the year-end appear conservative, while Advanced Micro Devices (AMD) is seen as potentially more aggressive. CPU prices are declining as both Intel and AMD take steps to clear their distribution channels, with AMD experiencing significant declines. Intel expects further channel adjustments in Q2 but with improvement compared to Q1, and both companies anticipate some Q2 quarter-over-quarter client growth. While another one or two quarters of channel correction are likely, normalization by Q3 or Q4 is considered feasible by the analysts.