EnThe annual semiconductor corporate conference season has seen several firms raise concerns regarding the impact of the U.S.-China trade war. Intel’s MD for business management, Jason Grebe, has struck a bearish tone for enterprise sales noting “we’re not assuming that enterprise rebounds … a lot of it has to do with macroeconomic uncertainty and trade wars”.
Indeed the trade war has distorted a “pretty classic semiconductor cycle” which has also had to deal with “uncertainty due to trade” according to Richard Templeton, CEO of Texas Instruments
The recent downturn in semiconductor demand has continued in July. Panjiva data shows imports of memory chips collapsed by 48.3% year over year, marking a ninth month of double digit declines. Similarly processors fell 15.3% making an 11th straight decline. Shipments of bespoke systems – where exemptions have been granted as outlined in Panjiva’s Aug. 30 report – have done slightly better but are still 5.9% lower.
The challenges brought by the tariffs may take some time to clear. NXP Semiconductor‘s CEO, Richard Clemmer has noted that “we’ve now gone through such an extended period of uncertainty that it would take a little bit of time for us to see it go back to a normal run rate“.
Source: Panjiva
While demand has remained weak, the global slowdown in semiconductor exports may be moderating. ON Semiconductor‘s CEO, Keith Jackson has stated “There’s also some good indications that some of the customers in China did kind of preload their inventories either in anticipation of increased tariffs or other types of trade actions“.
Panjiva’s analysis of official government data shows that exports from China, Japan, South Korea and Taiwan combined declined by just 0.9% year over year in August to $29.9 billion. That followed a 5.0% decline in the prior three months to July 31.
There were significant differences by country, however, with South Korean exports continuing to slide with a 30.7% drop in August and those from Japan declined by 2.1%. Exports from China meanwhile continued to rally with a 33.7% jump while Taiwan’s shipments rose by 11.7%.
Source: Panjiva
