Intel, TSMC, and Samsung executives say the global chip industry is bottoming out; IBS projects chip market revenue to fall ~12% in 2023 and grow 11%+ in 2024
Context & Ripple Effects
The projected trough follows the pandemic-demand surge and 2022 inventory build-up that left major chipmakers facing a sharp reversal in orders. Earlier coverage tied the downturn to both softer demand and added manufacturing capacity, a classic capacity-and-demand imbalance.
Subsequent results broadly validated the scale of the decline: global chip revenue fell 11% in 2023. But the recovery would not necessarily restore competitive positions evenly; later estimates showed TSMC extending its foundry-share lead.
First-order effects
- Intel, TSMC, Samsung and their customers can plan around an expected transition from inventory correction to renewed demand in 2024, rather than a further broad market contraction.
- The 2023 revenue decline puts immediate pressure on utilization, pricing and production discipline even as executives signal that the low point is near.
Second-order effects
- A bottoming market shifts the competitive question from cutting excess supply to capturing returning orders; foundry leaders with stronger customer demand can recover faster than weaker rivals.
- Chip buyers that delayed purchases during the correction gain reason to normalize procurement, while suppliers must avoid adding capacity faster than demand returns.
Third-order effects
- If recovery remains uneven, semiconductor cycles may increasingly reinforce concentration: scale and customer breadth can help leading foundries preserve utilization through downturns and gain share in upturns.
- The episode underscores the durable mismatch between slow-moving manufacturing capacity and volatile end-market demand, making inventory and capex discipline a continuing strategic differentiator.
The trend: This is one data point in the contracted semiconductor cycle, where an inventory-led slump gives way to recovery but can leave industry leadership more concentrated.