Still the Roaring 20s but mixed outlook for 2023

Flip Electronics’ president, Bill Bradford

Flip Electronics’ president, Bill Bradford, warns about increasing obsolescence driven by product line consolidations, fab efficiency drives and aging fab equipment going offline

By now it is evident the semiconductor cycle has peaked and we are entering a more difficult market in 2023—driven heavily by weakness in PCs and consumer products—and most severely effecting memory devices. Component inventories are building and many lead times will shorten throughout next year, although the mix is still out of balance. This means several product types will remain constrained in 2023, most notably high-performance analog, microcontrollers and certain legacy technology nodes that have not sufficiently expanded capacity in this cycle.

As a result, industries continuing to be impacted by constraints include automotive and industrial. Even if the auto market begins to soften due to recessionary pressures, the semiconductor content will increase dramatically with the accelerating shift to electric vehicles. We expect an eventual increase in aerospace and defense spending to replenish supplies and offset global threats. With all the puts and calls, expect to see a 10 per cent contraction of the semiconductor market in 2023 but returning to growth by the following year to keep our industry on track to be a trillion-dollar industry by decade’s end.

Flip Electronics puts significant focus on solving obsolescence issues and the industry is expected to continue to increase the rate of product discontinuance, driven by: product line consolidations; the drive for fab and backend efficiencies; and aged fab equipment being taken offline to make room for supporting next generation nodes. Working with customers that must support extended product life cycles remains our priority.