Will the global chip glut crisis that began in the second half of last year be eased? With the chip industry data for 2023 being disclosed one after another, the industry's view on this issue is hardly optimistic. Some analysts believe that this contradiction between supply and demand may only see a turnaround at the end of the year. Industry experts told the Global Times that the U.S. chip export ban on China, which began in the second half of last year, is profoundly altering global supply and demand, continuing to create an imbalance in chip supply in 2023.
Samsung LG "report card" shaking South Korea
According to a report by Yonhap News Agency on the 6th, the two giants of South Korean electronics - Samsung Electronics and LG Electronics on the 6th both handed in dismal report cards. Samsung Electronics 2022 fourth quarter profit fell by 69% year-on-year to 4.3 trillion won (about 23.2 billion yuan). This is the first time in nearly eight years that Samsung Electronics' single-quarter profit fell below 5 trillion won. LG Electronics' fourth-quarter profit plunged 91.2 percent year-on-year to 65.5 billion won last year, falling below 100 billion won for the first time since the fourth quarter of 2018.
Seoul Economy" on the 6th report that Samsung Electronics earnings "shock" the biggest reason is the semiconductor business is sluggish, various industries are reducing demand for semiconductors, outside estimates of Samsung semiconductor shipments are likely to continue to decline. The Korean Chamber of Commerce and Industry (KCCI) released a questionnaire survey of 128 semiconductor companies, 84 battery companies, and 88 bio companies on the 4th, and the results showed that 72.7% of the companies surveyed believe that the global supply chain is "similar" or "will worsen" this year compared to last year ". 62.3% of the companies surveyed said they suffered from the international supply chain crisis last year, and 39.7% said they are considering expanding overseas production through mobile production bases, etc. in order to eliminate instability.
In an article titled "Samsung Electronics' performance shock is an alarm to the Korean economy" published in the Korean Nation News on the 6th, there are already rumors that Samsung's semiconductor division may suffer a loss in the first half of this year. In the "post-epidemic era", South Korea is showing signs of an economic crisis due to the restructuring of the global supply chain and the impact of friction between the US and China.
China-US chip friction affects global supply and demand
"Oversupply of semiconductors will persist for a long time." The Nihon Keizai Shimbun reported on 4 January that a balance between supply and demand for semiconductors is not expected to be achieved until after autumn 2023. US Micron Technology CEO Sanjoy Morotya said at an earnings call last December that the market was experiencing "the most severe imbalance between supply and demand for semiconductors in the last 13 years". TSMC's chief executive Wei Zhejia said in October last year that customers' de-stocking may continue until the first half of 2023.
The Nihon Keizai Shimbun said that semiconductor products for smartphones and personal computers turn oversupplied in July-September 2022. Despite the gradual progress in suppressing semiconductor supply and inventory digestion, the restoration of supply-demand balance for semiconductors for smartphones is expected to wait until October-December 2023, and for semiconductors for PCs until July-September 2023. According to an analysis by the Nihon Keizai Shimbun, the manufacture of semiconductors takes several months, and it is production in the middle of 2022 that will affect supply now.
A survey of member companies conducted by the Japan Semiconductor Merchants Association in December last year showed high inventory levels at companies that use semiconductors to produce end products.
Xiang Ligang, a senior expert in the communications industry, told the Global Times that the U.S. chip ban on China has already affected the pattern of the chip industry around the world, "with the world facing a shortage of chips in 2021. This shortage is not that people really lack chips, but in response to the U.S. ban, chip companies around the world are stocking up, which eventually led to a gradual emergence of a chip surplus after the second half of 2022."
According to Xiang Ligang's analysis, the chip glut is likely to continue in 2023. China to respond to the U.S. ban brought about by the chip manufacturing problems, a large number of investment in this area, "China almost a year to add 100 new chip production lines, such a strong production capacity in 2023 will release the production capacity, which will make many chip companies around the world are facing a huge adjustment in supply and demand."
In step with the United States will hurt themselves
Despite the pressure of supply and demand on its own chip industry, Japan still wants to keep pace with the United States in its semiconductor policy, a move that is believed to "backfire" on its own chip industry. According to Japan's "Sankei Shimbun" reported on the 6th, Japanese Minister of Economy, Trade and Industry Minoru Nishimura held talks with U.S. Secretary of Commerce Raimondo in Washington on the same day, the two sides reached a consensus on Japan and the United States to work together to develop the next generation of semiconductors. The Sankei Shimbun analysis said that the reason why Japan and the United States reached a consensus, from the perspective of the United States, is to delay the development of China's semiconductor technology, while from the perspective of Japan, in order to achieve the production of next-generation semiconductors, it is necessary to carry out technical cooperation with the United States. Trade statistics released by Japan's Ministry of Finance for fiscal year 2021 show that about 40% of Japan's exports of semiconductor equipment and raw materials go to China, which is the largest export recipient. In areas such as photoresists, Japan has a global leading position. A major semiconductor company head said that it would be a serious problem for the industry if Japan reinforced its policy tie with the US to impose restrictions on semiconductor exports to China.
"The best situation for the global semiconductor industry is for everyone to support each other to form a division of labour." Xiang Ligang said, the United States began in breaking this state, Chinese enterprises in the future to gradually build up their own production capacity, as soon as possible to photolithography, photoresist and other equipment and raw materials to make up the short board. If Chinese companies can meet part of their own chip demand, the world's other chip manufacturing companies is a suppression. After all, this is a market worth US$200 billion.
