[Asia Economy Reporter Jeong Hyunjin] The global semiconductor lead time (the time it takes from order to production and delivery) has decreased for the first time this year. Although it is still more than twice as long as before COVID-19, this is interpreted as a sign of a slowdown in the semiconductor market growth.
On the 6th (local time), Bloomberg News reported, citing data from Susquehanna Financial Group, that the average semiconductor lead time last month was 27 weeks, one day shorter than in May. This marks the first decrease this year. Semiconductor lead time expanded from 25.7 weeks in January to 26.2 weeks in February, 26.6 weeks in March, and rose to 27 weeks in April. Compared to January 2020, before COVID-19 (12.7 weeks), it is more than twice as long.
Susquehanna stated that data from leading companies in the industry show that lead times have decreased for two consecutive months, with a reduction rate of about 45%. In particular, microcontroller units (MCU), power management integrated circuits (PMIC), and memory semiconductors saw the most significant reductions in lead time. MCUs were semiconductors that suffered from supply shortages severe enough to halt automobile factory operations during the COVID-19 pandemic.
Chris Roland, an analyst at Susquehanna, said, "There are some signs that supply chain inflation is easing and price increases are slowing," adding, "None of the key companies we track recorded the longest lead times ever this time. This is probably another sign that the cycle has reached its peak."
The reduction in lead time can be interpreted as the resolution of semiconductor supply and demand issues that had caused confusion, but it can also be seen as a signal that semiconductor market growth is slowing. It could also be interpreted that demand is decreasing faster than supply. Reports have emerged that major manufacturers in various countries are stockpiling raw materials such as semiconductors in advance or that semiconductor companies are reducing production in response to declining demand.
Citibank recently forecasted that semiconductor sales this year would increase by 13% compared to the previous year. However, it also warned that the semiconductor market could freeze as personal PC and smartphone sales slow due to recession concerns. According to market research firm Omdia, global semiconductor market sales in the first quarter of this year were $159.34 billion (approximately KRW 208.5 trillion), down 0.03% from the previous quarter. This was the first quarterly decline in semiconductor market sales in seven quarters since the second quarter of 2020.
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