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: Chip sales hit a record in 2022, even as a pandemic shortage turned into a glut

Global semiconductor sales managed to rise slightly to a record high in 2022 even as a two-year pandemic-driven chip shortage flipped to a glut about midyear, slowing down sales dramatically.

Sales of chips worldwide rose 3.2% to a record $573.5 billion in 2022, from 2021’s total of $555.9 billion, when they topped a half a trillion dollars for the first time, according to Semiconductor Industry Association on Friday. Chip sales were strong until about mid-2022, when previously optimistic forecasts soured after it became apparent that inventory was beginning to pile up in the channels.

For the fourth quarter, sales declined 14.7% to $130.2 billion from the year-ago period, and 7.7% lower than those from the third quarter of 2022. SIA also said that December sales decreased 4.4% to $43.4 billion from November 2022.

“Despite short-term fluctuations in sales due to market cyclicality and macroeconomic conditions, the long-term outlook for the semiconductor market remains incredibly strong, due to the ever-increasing role of chips in making the world smarter, more efficient and better connected,” SIA Chief Executive John Neuffer said in a statement.

Read: The world is buying fewer devices, and inventories for PCs, phones and tablets are building

Analog chips, the kind most commonly used in vehicles, consumer goods, and computers, scored the best improvement with a 7.5% increase in sales to $89 billion from a year ago, while logic chip and memory chip sales made up the largest segments at $176 billion and $130 billion in worldwide sales.

Inventory problems resulting from stuffed holiday channels have become the biggest headwind cited by many chip makers and device manufacturers this earnings season. A two-year pandemic-driven shortage quickly flipped to a glut in 2022, as seen in earnings reports from Intel Corp.
 Advanced Micro Devices Inc. 
Qualcomm Inc.
and GoPro Inc.

Those earnings reports arrived as the PC and the consumer-electronics industry deals with the worst shipment declines in recorded history and 2023 is being forecast as another year of declines.

Prior to the holidays, AMD, Intel and Nvidia Corp. 

all poured new products into the channel at a time when PC shipments were dropping at their steepest recorded rates and a wave of secondhand graphics-processing units, or GPUs, hit the market as unprofitable cryptocurrency-mining operations folded.

Over the past 12 months, the PHLX Semiconductor Index

has fallen 10.2%, while the S&P 500

has declined 7.6% and the tech-heavy Nasdaq 

has fallen 13.5%.

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