By Bolaji Ojo
What’s at stake:
Questions are being raised about the strength and viability of the current semiconductor market upturn. One analyst says he’s not certain a recovery is even taking place. Why? Unit shipments, which lead the typical cyclical upturn, are down. Sales at some companies keep dropping, while rising at others. This means the capex budgets of the last several years may be based on a false growth premise.
If a semiconductor market recovery is taking place right now, it must be the oddest upturn the industry has seen in its 60-plus years.
Veterans of the industry might, in fact, be forgiven for thinking the chips market has become unmoored from the fundamentals of its cycles. Unit shipments are down, inventories remain stubbornly high while average selling prices (ASP) are up. These facts do not align properly and are indicators of a market in data crisis.