It's cooling off and the leaves are turning yellow

Andrea Lati

• Order activity for semiconductor equipment continued to cool off, slipping by nearly two points in the first week of October
• All segments ended the week lower as chipmakers grow more cautious about their near-term prospects
• Memory fundamentals have deteriorated considerably over the last few months, pressuring chipmakers to cut spending and trim utilization rates in order to reduce supply and digest soaring inventories
• The ongoing correction in the memory market is not surprising—we have been warning of a deteriorating market backdrop since late April—however, the magnitude of the correction is steeper than expected
• The logic market is also encountering headwinds on multiple fronts and is expected to slow down even more in Q4
• On the equipment side, Assembly and Test manufacturers have already felt the impact of a slowing semiconductor market in 2H22, while WFE suppliers have been somewhat insulated due to strong bookings and long lead times
• We expect the WFE sales to come under pressure in 2023 as the semiconductor industry works through the excesses of the COVID-19 phase
• TechInsights’ Chip Price Performance Index continued to trend lower
  • DRAM fell
  • NAND flat
  • MPUs fell
• Hyperscale Fabless Capex is still growing on yearly basis, but the pace is slowing