Chip sales are in decline as the market faces major economic headwinds, most notably in mainland China. Credit: Fancycrave Worldwide semiconductor sales are down 0.5% in September, on a month-to-month basis, according to statistics released by the Semiconductor Industry Association, and down 3% compared to September 2021, as demand continues to soften in the face of multiple macroeconomic difficulties. According to the SIA’s report, September chip buying in the Americas region rose by 11.5% compared to the same month in 2021, to a total of just over $12 billion, and upticks to $4.53 billion and $4.05 billion, respectively were seen in Europe and Japan. Those gains, however, were more than offset by the mainland Chinese market falling by 14.4% to $14.43 billion in the same time frame, along with a 7.7% decline to $11.97 billion in all other markets. The decline is the first year-on-year slowdown since January 2020, according to a statement issued by SIA president and CEO John Neuffer. “The long-term market outlook remains strong, however, as semiconductors continue to become a larger and more important part of our digital economy,” he said. While Nueffer’s bullishness is echoed by other longer-term forecasters, several other indicators of a short-term decline for the world’s silicon makers exist, including recent Intel earnings news that saw the company’s third-quarter revenue drop 20% on a year-on-year basis. Net income for the US-based chipmaker plummeted from $6.8 billion in the third quarter of 2021 to $1 billion in the most recent report, a drop of 85%. The chip industry is facing structural upheavals caused by changing US trade policy toward China, supply chain disruptions caused by Russia’s invasion of Ukraine, and a prevailing view that the global economy is headed for a recession, which has blunted demand. A study released earlier this month by MIT and published in the Harvard Business Review highlighted that the “vast majority” of chip manufacturing takes place in Taiwan, the People’s Republic of China and South Korea, and that recent US moves— including the CHIPS Act—aimed at reducing the country’s dependence on overseas supply will take a long time to bear fruit. “The optimistic estimate [for the construction time on new semiconductor facilities in the US] is at least two years,” the study’s authors wrote, noting that effective dependence on East Asia for chip supplies is a matter of assembly and testing facilities as much as raw manufacturing capability. The latest trade restrictions, enacted by the US Commerce Department earlier this month, are likely to cause major problems for the Chinese domestic silicon industry, most prominently in the area of advanced chips. Overall, experts agree, current supplies of silicon have outstripped demand, even as individual markets, like the automotive sector, struggle with continuing shortages. Related content news analysis AI chip shortages continue, but there may be an end in sight While GPUs are in high demand, they still need high-performance memory chips for AI apps. The market is tight for both — for now. By Lucas Mearian May 07, 2024 7 mins CPUs and Processors Generative AI Technology Industry feature Windows 11 Insider Previews: What’s in the latest build? Get the latest info on new preview builds of Windows 11 as they roll out to Windows Insiders. Now updated for Build 22635.3570 for the Beta Channel and Build 26120.461 for the Dev channel, both released on May 3, 2024. By Preston Gralla May 07, 2024 252 mins Small and Medium Business Microsoft Windows 11 news analysis 3+ reasons Apple might want to make its own server chips Apple reportedly has a top secret plan to make AI chips for servers to provide generative AI services. By Jonny Evans May 07, 2024 5 mins Apple CPUs and Processors Generative AI opinion GenAI is to data visibility what absolute zero is to a hot summer day Given the plethora of privacy rules already in place in Europe, how are companies with shiny, new, not-understood genAI tools supposed to comply? (Hint: they can’t.) By Evan Schuman May 06, 2024 6 mins Data Privacy GDPR Generative AI Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe