The PC market has encountered the difficulty of a sharp decline in demand, with shipments hitting a new low in more than 10 years, and the results of both AMD and Intel CPU makers are not looking good.

Intel: revenue hit a record low since 2010

Not long ago, Intel released the first quarter of fiscal year 2023 earnings show that the first quarter revenue of $ 11.7 billion, down 36% compared to $ 18.4 billion in the same period last year, creating a record low since 2010, and 2 consecutive quarterly losses; net loss of $ 2.8 billion, a year-on-year plunge of 134%.

The poor performance of the major businesses also reflects the challenges faced by Intel from the side.

To Intel PC, notebooks, including the client computing business group (CCG), for example, the first quarter revenue reached $5.8 billion, down 38% year-on-year. This is partly due to the continued weak market demand, IDC estimates that global PC shipments fell by nearly 30% in the first quarter of 2023; on the other hand, the processor market changes continue to ferment, Apple switched to its own chips, AMD to catch up, so that the formerly dominant in the field of Intel suffered the impact.

On the other hand, the demand for chips in data centers has declined in recent months, bringing further pressure on Intel's performance. At the same time, Googl, Amazon and other cloud giants have moved toward self-designed chips; Nvidia CPU iterations to accelerate; Arm camp eyeing, under the layers of the cause, Intel data center and AI business (DCAI) first-quarter revenue of $3.7 billion, a heavy drop of 39%.

A series of numbers make Intel's earnings report is quite gloomy. As for the future trend of the industry, Intel CEO Kissinger believes that Intel will move towards a mild rebound.

End market demand will come out of weakness or become a note of confidence in Intel. In the PC field, Intel believes that inventory adjustment is basically as expected, by the end of the second quarter the market will be at a healthy inventory level, the PC market is expected to achieve about 270 million units of sales in 2023.

In the server segment, Intel expects the overall market size to decline year-over-year in the first half of 2023, while the second half of the year will see a modest rebound.

And with relatively strong demand trends in markets such as industrial, automotive and infrastructure, Intel believes that businesses such as PSG, IFS and MBLY will continue to maintain strong growth momentum and will achieve year-over-year growth in 2023

AMD: First revenue decline in 2019

After Intel reported a record quarterly loss, AMD was also clearly hit by the continued downturn in the personal computer (PC) market.

A few days ago, AMD released its Q1 financial results as of April 1. In the first quarter of 2023, AMD's revenue was $5.353 billion, down 9% year-over-year; its net loss was $139 million, down 118% compared to $786 million a year earlier.

This is AMD's first revenue decline since 2019, with Ryzen processors being the hardest hit, further highlighting the dilemma of a significant decline in PC sales.

A breakdown, including desktop and notebook PC processors and chipsets, AMD's customer business unit revenue of $ 739 million in the first quarter, a sharp decline of 65.2%; operating profit is compared to the same period last year's profit of $ 692 million, into a loss of $ 172 million.

Q2 quarterly revenue forecast, AMD expects revenue of $5.3 billion, up or down $300 million, between $5-5.6 billion, by the median will be down 19.1% year-on-year, meaning that the second quarter results will also decline.

But AMD said the worst is soon to be over, similar to the previous statement of Intel CEO. AMD CEO Zifeng Su said: "With the strength of the PC and server markets, and the addition of our new products, we remain confident of growth in the second half of the year."

Gartner data show that global PC shipments fell 30% year-on-year to 55.2 million units in the first quarter of this year. While the weak PC business continues to hit chipmakers, some industry views suggest that the PC market may have hit bottom.

And PC outside, smartphone shipments also fell to the freezing point.

In February, Qualcomm also delivered a "chilling" earnings report, disclosing Q1 financial results for fiscal year 2023, with revenue of $9.463 billion, down 12% year-over-year; net profit of $2.235 billion, down 34% year-over-year.

Specifically, Qualcomm chip business QCT revenue of $ 7.89 billion, down 11% year-on-year, including cell phone chip revenue of $ 5.75 billion, down 18%; technology licensing division QTL business revenue of $ 1.52 billion, down 16% year-on-year, the main source of revenue in this sector is to collect the right to use cellular patents.

For the reason of the slowdown in earnings growth, the analysis said there is a direct link with the slump in the two major business lines of the chip business QCT and the technology licensing division QTL.

It is not difficult to understand, in the context of the smartphone dividend tightening, Qualcomm's performance decline can not be faulted.

But this is not the end of the line, Qualcomm CEO Cristiano Amon said that cell phone market demand continues to decline, and the continued growth of channel inventory is expected to continue at least in the first half of this year. In particular, the low-end and mid-range cell phone market, demand is particularly weak.

Recently, Qualcomm released its fiscal year 2023 second quarter financial results, the second quarter revenue of $9.275 billion, down 17% compared to $11.164 billion in the same period last year; net profit of $1.704 billion, down 42% compared to $2.934 billion in the same period last year;

MediaTek: Results hit a low point in nearly nine quarters

On April 28, chip design major MediaTek announced its first quarter 2023 financial results.

Affected by customer inventory adjustment and weak demand. MediaTek's revenue for the first quarter of 2023 was NT$95.652 billion, down 11.6% sequentially and 33% year-over-year; net profit after tax was NT$16.874 billion, down 8.7% sequentially and 49.3% year-over-year, sinking to a low point in nearly nine quarters.

MediaTek said that the inventory of customers and channels has continued to decline, but the consumer momentum of some consumer electronics, such as cell phones, is still lower than expected. MediaTek's 2023 Q1 revenue from cell phones accounted for 46 percent, down 20 percent sequentially and 41 percent year-over-year.

In terms of inventory, MediaTek's inventory turnover days rose rather than fell, reaching 128 days in the first quarter, up from 126 days in the previous quarter and 105 days in the same period last year.

According to data disclosed by IDC, global smartphone shipments in 2022 will be 1.21 billion units, down 11.3% year-on-year and the lowest record since 2013. Stepping into 2023, the chill in the cell phone market has not yet dissipated. Canalys reported that the global smart market fell 12% year-on-year in the first quarter of 2023, which is the fifth consecutive quarter of decline in the smartphone market.

Based on this, MediaTek CEO Lixing Cai said that although the visibility of the end market demand is limited, customers and channel inventory has continued to decline, but the consumer momentum of some consumer electronics products such as cell phones is still lower than expected, it is expected that with the gradual decline of industry chain inventory, revenue is expected to improve in the second half of the year, global smartphone shipments in 2023 may further decline to 1.1 billion units, but it is expected that the second quarter and Cell phone sales will start to pick up in the second half of the year.

MediaTek revenue is still mainly from cell phone chips, by the overall industry continues to adjust inventory, coupled with the 5G upgrade tide has reached a plateau, and Qualcomm price competition between the more significant, also compressed MediaTek profit space.

In response to market concerns about cell phone chip price competition, Tsai Lixing responded that such price competition mainly in entry-level cell phones, as MediaTek mentioned a few quarters ago, that the "bottom-up competition" type of price is not an effective strategy, neither effective in boosting terminal demand, nor can significantly change the market share. Therefore, whether in the past or in the future, MediaTek's consistent strategy is to achieve a balance between market share, revenue and profitability, rather than focusing only on price competition.

Overall, entering 2023, the consumer electronics market is turning is what many people expect. However, in Q1 alone, both the PC market and the smartphone sector, the cold wind continues to blow performance continues, and this is a direct drag on the processor chip market.

Meanwhile, the memory chip market is still tumbling. Samsung Electronics chip division now has the largest loss in its history, with operating profit plummeting 95%; SK Hynix Q1 revenue fell 58.1% year-on-year, with losses widening to 3.4 trillion won.

On April 27, Samsung announced its Q1 2023 earnings, with revenue of 63.75 trillion won, down 18% year-on-year and 10% sequentially. In addition, operating profit was 640.2 billion won, plunging 95% year-on-year to the lowest level in 14 years. In addition, Samsung also changed the past "no production cuts" statement, said it will adjust the production of memory chips.

Samsung said that the reason is the global macroeconomic environment is uncertain, continued inventory adjustment and the overall demand decline. Memory chip demand recovery is expected to be limited in the second quarter, due to weak consumer markets and more conservative investment in servers by major data center companies. At the same time, Samsung's chip business will focus on high-capacity servers and mobile products, and is expected to "gradually recover in the second half of the market, global demand will also rebound.

Just a day before Samsung released its earnings, another major South Korean memory chip giant SK Hynix released its first quarter 2023 earnings, the company achieved revenue of 5.09 trillion won, down 34% sequentially and 58% year-on-year; net loss of about 2.59 trillion won, compared with a net loss of about 3.72 trillion won in the previous quarter, two consecutive quarters of losses. In the quarter, SK Hynix's operating loss reached 3.40 trillion won, a record single-quarter operating loss for the company.

According to SK Hynix CFO Youhyun Kim, the memory chip market is still in a tough state, but it seems to be bottoming out. Sales are expected to pick up in the current quarter, and the situation in the memory chip market is expected to improve from the second half of this year. Hynix said that after a series of production cuts in the storage industry, customer chip inventory levels declined throughout the first quarter, indicating that the production cuts started last year began to gradually take hold.

Outside the two major South Korean memory chip makers, U.S. memory chip maker Micron reported revenue of $3.69 billion for the second quarter of fiscal year 2023, down 53 percent year-on-year.

This is Micron's worst quarterly loss in the past two decades, Micron Chief Executive Officer Sanjay Mehrotra said "the industry will face the most severe recession in the past 13 years.

Since the second half of 2022, the market demand for memory chips has fallen again and again, and shipping prices have fallen sharply. trendForce previously judged that in the first quarter of 2023, the overall global DRAM product prices continue to decline 13%-18%; NAND, the first quarter continued to decline 10%-15%. The agency recently updated its judgment that DRAM prices will continue to decline by 10%-15% in the second quarter, and there is still no signal to stop the decline; NAND prices also continue to decline by 5%-10%, and whether the decline can be stopped depends on the demand in the second half of the year and whether there is a larger scale production cut by the original manufacturers.

But from the end market feedback, because the price of memory chips has almost reached many original cost price, several major storage chip manufacturers have each taken measures to refuse to reduce the price of the chip. According to Taiwan Electronics Times, Micron has officially issued a notice to distributors that since May, DRAM and NAND Flash will no longer accept inquiries below the current stage of the market; Samsung has also previously notified distribution agents that it will no longer sell DRAM chips at prices lower than the current price.

From the latest financial reports released by Samsung, SK Hynix, Micron, memory chip market conditions during the year and in the medium and long term has been the preliminary conclusion that, driven by the gradual growth in sales, demand for memory chips may continue to be sluggish in the second quarter, and then gradually pick up in the second half of the year, or will come out of the doldrums later this year.

While consumer electronics and memory chips are more than just a cold wind, another track in the semiconductor industry - automotive chips - is still holding strong.

A few days ago, Texas Instruments released its first quarter 2023 earnings, with revenue of $4.379 billion, down 11% year-on-year, and net income down 22% year-on-year. Except for automotive, all other business revenue fell. This is also the largest revenue decline for Texas Instruments in the past ten quarters.

Dave Pahl, vice president and head of investor relations at Texas Instruments, pointed out at the earnings meeting that all end market demand outside of automotive showed a year-over-year decline: industrial markets were roughly flat; consumer electronics continued to show general weakness, down about 30%; communications equipment fell in the mid-double-digit range, and enterprise systems fell about 30%; only automotive chips maintained a growth trend, with revenue up 4% year-over-year. Only automotive chips maintained a growth trend, with revenue up 4% sequentially.

At the same time, Texas Instruments first quarter inventory days rose 38 days to 195 days, inventory amount rose $531 million to $3.3 billion, further indicating a decline in market demand, making inventory rose sharply.

Texas Instruments said that market demand remains weak, at least in the short term. Second-quarter revenue is expected to be between $4.17 billion and $4.53 billion, down 16.5 percent from a year ago and worse than analysts' estimates of a 15 percent decline.

In contrast, Infineon's revenue for the fiscal quarter of 2023 grew 25% year-on-year, with the automotive products business up a strong 35% compared to the same period last year.

Thus, even with weak demand for smartphones, computers and data centers, Infineon achieved earnings and revenue growth in the first quarter of fiscal 2023 on the back of strong sales of automotive and industrial chips.

In addition, Infineon said that with the continuous development of electric vehicles and assisted driving technology, customers are now more willing to sign capacity reservation agreements or sign long orders to ensure the supply of semiconductors. And in fiscal year 2023, Infineon's automotive business products are fully booked for capacity.

ON Semiconductor announced better-than-market-expected first-quarter 2023 earnings on May 2.

ON Semiconductor's first-quarter revenue was $1.96 billion, up a modest 0.76 percent year-over-year, better than analysts' general expectations; net income was $462 million, down 12.96 percent year-over-year.

Hassane El-Khoury, CEO of ON Semiconductor, said that even though the global economic environment is full of uncertainty, the first quarter earnings results still exceeded expectations. Among them, silicon carbide-related revenue nearly doubled year-over-year, mainly because production exceeded previous internal plans, while ADAS and energy infrastructure business revenue also grew at a year-over-year rate of 50%.

In addition, quarterly results from ST and NXP similarly showed better-than-expected and continued strength in net revenues from the automotive and industrial segments. The continued growth in the automotive business compensated for the decline in other businesses, driving their overall better-than-expected performance.

On the other hand, ADI's Q1 2023 results continued to hit a record high, up 21% year-over-year, driven by the automotive and industrial businesses. Among them, the automotive business contributed 22% of ADI's revenue to $718 million, a record revenue high, and 29% revenue growth rate than industrial, communications, consumer and other sectors.

Not only the traditional automotive chip makers, in several major businesses in a series of setbacks in Intel, only Mobileye benefited from the growth of the automotive end market to achieve a record revenue increase, up 16%, becoming a rare glimpse of warmth in Intel's earnings report this quarter;;

Qualcomm automotive chip business revenue grew 58% year-on-year to $456 million in the first quarter. However, the automotive chip business volume is small, and ultimately failed to make up for the decline in revenue gap in the cell phone chip business. But the strong growth of new business at least let Wall Street see a little new light.

MediaTek, on the other hand, reiterated its strategy of diversification, and its established automotive products have demonstrated strong growth over the past few years. The recently announced Dimensity Auto Tiangui automotive platform targets growth opportunities in the areas of intelligent cockpits, connected cars, smart driving platforms and key components. L.H. Tsai said at the FIA: "We will definitely shift our resources to the automotive and computing areas very quickly, as these areas will provide us with growth in the next three to five years."

From the above-mentioned manufacturers' financial reports, automotive electronics has great potential for growth and has become one of the few growth tracks under the current semiconductor down cycle.

Morgan Stanley pointed out that in 2018, the global automotive electronics market of about $ 150 billion, is expected to explode in 2025 to $ 287 billion, mainly due to the continued increase in the penetration of electric vehicles, coupled with the increase in the use of ADAS, is expected in 2025 among the material costs of electric vehicles, up to 35%-45% for automotive electronic components, is 2.5 times the traditional car, the overall demand for automotive chips Growth is expected.

TSMC: Lowered expectations, ending 13 consecutive years of growth momentum

TSMC announced its Q1 2023 results, showing revenue of NT$508.63 billion, up 3.6% year-over-year and down 18.7% sequentially.

Looking at the performance of the five major application categories of chips, namely smartphones, high performance computing (HPC), Internet of Things (IoT), automotive electronics, and consumer electronics, only automotive electronics grew 5% YoY, while the rest decreased from the previous quarter. Among them, the smartphone class chip revenue decreased by 27% and HPC decreased by 14% from the previous quarter.

As you can see, TSMC is also struggling to cope with continued weak demand for electronics as consumers and businesses alike tighten their budgets in response to soaring inflation and a potential global recession.

In terms of TSMC's revenue for March 2023, TSMC's revenue was NT$145.408 billion, a decrease of 15.4% year-over-year. The last time TSMC's monthly revenue declined year-over-year was in May 2019, this time after a 45-month hiatus of year-over-year decline.

It is understood that TSMC's capacity utilization continues to decline due to massive order cuts from companies such as Apple and MediaTek, as well as conservative orders from companies such as AMD, Nvidia, Qualcomm and Intel.

TSMC said that its revenue performance in 2023 was affected by the overall recession and customer adjustments due to weak end market demand, and after entering the second quarter, TSMC's overall performance is expected to continue to be impacted by customer inventory adjustments. At the same time, TSMC lowered its revenue forecast for the full year 2023, changing from a slight increase to a decline of 1%-6%, ending 13 consecutive years of growth momentum.

Some analysts are concerned that TSMC's lowering of its outlook or capital expenditure plans will mean that the downturn in the industry will last longer. But some analysts added that TSMC's results could rebound as early as the third quarter, corresponding to the improved quarterly outlook forecast by Apple, Nvidia and AMD.

On the chip side, 5nm process chip shipments accounted for 31% of the company's wafer sales in the first quarter of 2023; 7nm process shipments accounted for 20% of wafer sales in the full quarter, according to the earnings report. TSMC said that overall the advanced process revenue reached 51% of the full quarter wafer sales.

TSMC CEO Chieh-Jia Wei said that the 3nm process has been scheduled for volume release in the second half of the year and is already seeing strong demand for N3 chips for years to come. In addition, TSMC also plans to start mass production of 2nm chips in the GAA process in 2025.

UMC: Weak terminal demand, strong automotive chip growth

UMC announced its Q1 2023 operating report with consolidated revenue of NT$54.2 billion, down 20.1% sequentially and 14.5% year-over-year.

UMC's business was impacted by weak wafer demand in the first quarter of 2023 as customers continued to digest their inventories," said Wang Shih, General Manager of UMC. As previously announced, wafer shipments declined 17.5% sequentially and manufacturing capacity utilization dropped to 70%."

Wang Shih emphasized that "automotive and industrial products continued to grow during the quarter, despite weak demand in key end markets. In particular, its automotive business accounted for 17 percent of total sales in the first quarter. Driven by automotive electronics and autonomous driving, the content of automotive ICs is expected to continue to increase, and automotive products will become UMC's main revenue source and growth driver in the future."

UMC noted, "Entering the second quarter of 2023, wafer shipments are expected to be flat as the overall demand outlook remains sluggish and customers are expected to continue to adjust their inventories. At the same time, the company continues to take strict cost control measures to ensure profitability in the short-term business cycle."

Intel IFS: the biggest X-factor facing

IFS, the foundry services business group that Intel has high hopes for and carries the strategic goals of IDM 2.0, still performed hard as expected, with revenue of $118 million in the first quarter, down 24% year-on-year.

There is a view that the foundry business is the biggest X factor facing Intel.

Because, on the one hand, the cornerstone of Intel XPU strategy can not be separated from the support of advanced processes; on the other hand, to achieve later in the advanced process, relying on the node step by step and customer orders to protect.

Kissinger is confident in this, he mentioned that Intel is steadily advancing four years five process nodes plan, 2024 in process performance to catch up with rivals, 2025 with Intel 18A process to achieve undisputed leadership.

Intel is steadily advancing its four-year, five-process node plan:

Kissinger further emphasized that Intel will expand its IFS foundry customer base to enable additional product iterations in 2023 through advanced packaging technology, Intel 16, Intel 3 and Intel 18A processes.

But there are still many variables in Intel's foundry business, such as having to delay the acquisition of Tower; the delayed start of construction of the German factory; whether the foundry eco-building can be successfully promoted; and whether it can get enough customers to fill its huge capacity of new fabs to make operations profitable?

In the current trend and situation, it will take a few more years to determine whether Intel can be globally competitive again.

SMIC: Revenue expected to decline by 10 digits in 2023

For its part, SMIC said that the industry cycle is still at the bottom in the first half of the year, and the impact from external uncertainties remains complex. Regarding 2023 full-year results, SMIC said that based on the premise of a relatively stable external environment, the company expects 2023 full-year sales revenue to decline in the low teens year-over-year and gross margin to be around 20%; depreciation to increase by more than 20% year-over-year and capital expenditures to be roughly flat compared to 2022; and monthly capacity increments by the end of the year to be similar to 2022.

Meanwhile, SMIC has continuously promoted the construction of four major fabs in recent years, namely SMIC Shenzhen, SMIC Lingang, SMIC Jingcheng and SMIC Xiqing. After the completion of these four plants, SMIC's production capacity is bound to increase significantly. SMIC also said that the gross margin is under high depreciation pressure during the continuous investment process, and the company will always aim for sustainable profitability and strive to grasp the rhythm of capacity expansion to ensure a certain level of gross margin.

Counterpoint expects global logic foundry industry sales to grow 27% year-over-year in 2022, but weak consumer demand and high IC inventories pose significant risks for 2023. Global foundry semiconductor revenue is expected to decline 5%-7% in 2023, and average capacity utilization is expected to fall to about 75% of 2022 levels this quarter.

For the full-year 2023 market direction, the industry said the industry cycle is still at the bottom in the first half of the year, and the impact from external uncertainties remains complex.

Finally, in looking at the semiconductor equipment market.

Semiconductor equipment industry may be considered one of the few growth tracks in the entire semiconductor industry chain, the basic domestic and international equipment manufacturers in the first quarter of 2023 have achieved varying degrees of growth in performance.

However, for semiconductor equipment suppliers, in the short term, still facing the macroeconomic slowdown, an unfavorable factor, international semiconductor equipment suppliers and the adverse impact of the export ban.

For future expectations, from a short-term perspective, the market demand is weak and continued downturn is the unanimous consensus. According to SEMI forecast, in 2023 the global semiconductor equipment market size will be reduced by 16% to $ 91.2 billion.

But in the long run, semiconductor equipment as a cornerstone to support the development of the electronics industry, is the entire semiconductor industry chain links in the broadest market size, the most important strategic value of a link, is expected to long-term positive. It is expected that with the end of the inventory correction, bullish 2024 semiconductor equipment market will be a significant recovery, the market size will reach $ 107.16 billion, is expected to grow 18% year-on-year.

In general, consumer electronics, storage chips and other market demand is still not seen back, the possibility of short-term recovery is unlikely; automotive chip market still maintains growth, becoming one of the few revenue growth points for diversified business companies.

Foundry industry is affected by upstream demand, orders shrink, crop rate decline, lower annual revenue estimates; and as the semiconductor industry chain "sellers" equipment manufacturers seem to continue to earn a lot of money.