OEMs lowered their chip spending ??

Semiconductor demand weakness is rippling through the supply chain, impacting semiconductor capital spending and wafer fab equipment. The top 10 global original equipment manufacturers (OEMs) have lowered their chip spending by 7.6 per cent and accounted for 37.2 per cent of the total market in 2022, as per the report from Gartner.

  
Fears of a global recession and weaker consumer spending habits have led to companies reducing expenditures for innovative semiconductor products across various markets, which has led to weakened demand for PCs and smartphones in 2022, impacting global OEMs production and most of the top 10 semiconductor customers are major PC and smartphone OEMs.

 
There is a sharp drop in consumer demand for PCs and smartphones preventing the top OEMs from increasing unit production and shipments.

 
"The zero-Covid policy in China also caused serious material shortages and short-term disruptions to the electronics supply chain. A lingering semiconductor shortage in the automotive, networking and industrial electronics markets, raised chip average selling prices and accelerated semiconductor revenue increases in these markets," said an expert

 
Moreover, the report said that all the top ten companies in 2021 remained in 2022. Apple remained at the top of the semiconductor spending customer ranking for the fourth year in a row. The company decreased spending on computing micro-processing units by 11.7% due to the continuous shift to having its own in-house-designed application processors. However, Apple increased spending on non-memory chips by 2.8%.

 
Samsung Electronics increased chip spending by 2.2% and retained the second position. The company gained more market share in the smartphone market due to its leadership in foldable phones, as well as benefiting from the zero-COVID policy in China, which affected its competitors, leading to an increase in spending on semiconductors in 2022.

 
Sony showed the fastest growth in chip spending in 2022 due to sustained global consumer interest in PlayStation 5 video game consoles. However, production volume could not be raised to meet the level of demand, due to continued serious chip shortages and disruption of logistic networks throughout the year.

 
Going forward, Semiconductor demand for enterprise and data-centre solutions have held up a little better compared to more consumer-oriented markets like PCs and smartphones and expects a sharp slow-down as well in 2023.

S Mohini Ratna, Editor, VARINDIA