Automotive Industry Slump and Semiconductor Demand Rebound

Learn about the automotive industry slump, recovery from the semiconductor shortage, and market predictions for 2023 in our latest industry update.

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Semiconductor Shortages, Slow Recoveries, and Market Forecasts

Through shortages, stockpiles, and slumps, 2022 has been a historic year for the semiconductor industry. As 4Q22 draws to a close, every industry that relies on electronic components is ready for good news in the new year. Some experts say that could happen, but not for a while. In the meantime, the automotive industry continues to suffer while semiconductor demand for consumer electronics remains low. Let’s take a closer look in our latest industry update.

Automotive Industry Still in a Slump

Although a recent Morgan Stanley report shows that the shortage of some automotive components has eased, the industry as a whole is still playing catch-up. The scarcity of less-advanced analog, power, and logic semiconductors is limiting new vehicle production. Jaguar Land Rover will cut output through spring 2023 in the UK due to the shortage. Between pandemic-fueled East Asian supply chain disruptions and intense competition for available supplies from other industries, it could take a while for the automotive industry to recover fully.

The Worst is Over (Probably)

Experts say that while the worst of the global semiconductor shortage has likely passed, recovery will be slow and uneven. Waning demand for consumer electronics has helped suppliers catch up on order backlogs. Still, dents in the global economy from inflation, the pandemic, and geopolitical conflict likely mean that demand will remain stagnant for the near future. However, according to Micron chief executive Sanjay Mehrotra, the need for memory and storage will continue to rise in the long term.

2023 Global Semiconductor Market Forecasts

Supply woes are expected to continue for much of the electronics industry into next year. Nikkei Asia predicts that the global semiconductor market will shrink by 4% in 2023. In contrast, the US, Japan, and Europe are predicted to see growth. This is likely due to the States’ export restrictions with China and the impact of China’s strict pandemic lockdown policies. Meanwhile, the Semiconductor Industry Association expects global demand for semiconductors to rebound toward the end of 2023.

As the new year approaches, Velocity is committed to staying in step with the latest news and ahead of market trends to ensure that our partners never face a line-down situation. Through supply chain shifts, slumps in demand, and industry recovery, Velocity is your trusted partner and independent electronic component supplier. We understand the unique and urgent nature of your supply chain needs, and we’re relentlessly dedicated to finding the solutions that work for you. Submit your RFQ today.

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