According to Omdia, the semiconductor market experienced a 2% decrease in the first quarter of 2024, resulting in a total of US$151.5 billion.
Following a strong fourth quarter fueled mostly by seasonal demand, the market normally faces a sequential decline in the first quarter. The semiconductor market declined in the majority of its sectors this quarter.
The consumer segment was hit the hardest dropping 10.4% from the fourth quarter of 2023 while the industrial segment declined 8.5% due to inventory adjustments. Even the automotive segment, which has seen steady growth for years, turned negative with a 5.1% decrease in the first quarter of 2024.
The drops in these segments were offset by quarterly growth in the data processing division, which increased 3.7%, driven by a continuous high demand for Nvidia's chips and other AI-related products, according to Omdia.
Nvidia maintains its strong growth trajectory, increasing its market share by more than 2% to 14.5% of total semiconductor market sales. Despite surpassing the conventional semiconductor leaders, Samsung and Intel, which combined account for 18.6% of semiconductor market sales, Nvidia continues to gain pace, according to Omdia. Furthermore, with the revival of memory growth, SK Hynix and Micron increased their market share ranks.
Initially, the automotive sector resisted the industry-wide semiconductor market growth triggered by the COVID-19 pandemic. However, it eventually succumbed to decline and recovered rapidly, according to Omdia.
The automotive segment encountered a slight downturn of 0.6% in the fourth quarter of 2023, following 13 consecutive quarters of revenue growth that commenced in the third quarter of 2020. Nevertheless, the decline was further exacerbated in the first quarter of 2024, with a more significant decrease of 5.1% compared to the previous quarter.
This downward trend reflects a broader deceleration in the demand for cars, Omdia indicated. The growth rate of EVs has tapered off in recent quarters, prompting a recalibration in semiconductor demand. Despite these challenges, the auto semiconductor market remains a promising long-term growth area, poised to climb over the next five years, Omdia said.
Omdia's market trackers show that combined IDM and foundry fab utilization align with the semiconductor industry's overall trend. Following a peak in semiconductor demand during the early stages of the COVID-19 era in 2022, utilization rates fell in the second half of 2022 due to a significant weakening in demand and record-high inventories. Despite semiconductor sales increasing throughout 2023, fab utilization rates have remained in the low 80% range.
"Utilization rates began a slight uptick in 2H23 as the market began seeking equilibrium. However, it has yet to materialize as traditional demand patterns have not fully emerged," said Omdia chief analyst Craig Stice. "Demand will continue to improve in 2H24, which should lead to inventory corrections consequently driving up factory utilization rates once again."
