Two different perspectives
In 2022, the pure-play foundries (TSMC, GlobalFoundries, UMC, SMIC …), collectively have produced more wafers than 100% of their wafer capacity (per the GSA) – and at the same time wafer prices have gone up significantly too. Foundries gear up for 2024 – according to SEMI, collectively they are spending north of $500B to build new fabs. EU and US governments launch previously unseen subsidy budgets for semiconductors.
But purchase manager indices show a negative trend as we leave 2022 behind us (J.P.Morgan). Inflation, at least in Europe, is higher than ever since 2007 – that’s when the #iphone was first introduced. The consumer’s consumption power is reduced (unless you work in Belgium, where salaries are automatically adjusted about 11% coming January – must be the only country in the world, but let me know if we are mistaken).
These are 2 perspectives that seem to clash, yet we do live in one world, one reality. So how does this all add up? Or better how do we resolve this? We will be happy to read your comments.
Outlook for 2023 and 2024
We believe that 2024 is where our focus should be – that shall be our horizon: the (next) upturn of the semiconductor market. Now, we shall figure out what to do in the meantime.
2023 will be a year of opportunity to invest in our readiness to grow and flourish in 2024. Whatever your semiconductor business, your key assets: team, skills, technology, processes, and reputation, should not go to waste – that would be mottainai (Japanese).
Focus on recurring discriminating value
Recurring discriminating value is and remains key. It is our mantra at Sofics. If recurring and discriminating value is delivered to the customer, there will be customer reward and incentive to buy again – a very strong proposition for your company. If your engineers find new challenges to learn, to innovate, to create solutions time-and-again, then they will align their professional careers with your company – again a major element that creates stability. And, shareholders who see a recurring return on their investment will enable growth and provide financial stability.
Creating and delivering recurring discriminating value should always be your polar star, your guidance on your business journey, also in 2023.
Changes in 2023
What may happen in 2023? My crystal ball sees that China will not give up and work harder than ever to narrow the silicon production technology gap with the rest of the world. The US sanctions will fuel the Chinese determination.
Geopolitical stress will (as is in progress already) put more fabs on European and US soil – however the next big challenge may likely be the establishing and local presence of a functional and effective eco-system to support and attract wafer orders. And, let’s not forget the local shortage of engineering resources – the Achilles heel of the industry. South-Korea (Samsung Foundry) already has the basics of such ecosystem in place – it will be interesting to see if the technology gap widens or narrows by this time of year, at the end of 2023.
Koen Verhaege (https://linktr.ee/koenverhaege)
CEO of the Sofics team – your trusted supplier of on-chip robustness IP solutions
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