A change in supply conditions will result in cheaper prices and dramatically shorter lead times for discrete semiconductors in 2019, suggesting that “supply conditions are swinging back to favor [semiconductor] buyers,” according to a new report.
Rob Lineback, senior market research analyst for IC Insights, notes that prices for discrete semiconductors have spiked in the past 12 months as a result of lead times stretching to 30 or more weeks for some chips. Next year, however, Lineback sees the lead times returning to “the normal 10 to 12 weeks,” adding that lead times “will get shorter as we get closer to 2020.”
Emerging from a difficult year
This is good news for semiconductor buyers, who have been challenged by tight supply conditions for discretes, which include small signal transistors, power transistors, diodes, rectifiers, and thyristors.
Over the past year, a shortage in discretes has forced some semiconductor buyers to purchase parts from brokers and independent distributors rather than chipmakers or authorized distributors. This has resulted in an average price increase of 8% in 2018.
With the increased capacity, Lineback sees prices declining 2% in 2019. Lineback predicts revenue from the global discretes market will increase to $29 billion next year, a 5% increase over the $27.6 billion predicted by the end of 2018.
Optimistic about optoelectronics
Discretes aren’t the only tech sector expected to see falling prices as a result of improved supply chains in 2019. Optoelectronic products — including character displays, lamps, optocouplers, lasers, and light sensors — are estimated to fall 6% this year and an additional 3% in 2019, according to IC Insights.
Even with the falling prices, IC Insights sees the overall optoelectronics market increasing 11% to a record-high of $40.9 billion in 2018 and ballooning another 10.5% to $45.2 billion in 2019. A big part of this growth is a result of the very high demand for light sensors, which a variety of products use, including the automatic controls for displays and smartphones, heart rate monitoring equipment, and more. A recent market research report predicts that the light sensors market will be worth $2.14 billion by 2022.
Despite forecasts for growth in 2019, Lineback and other experts see the global discretes market remaining flat in 2020, mostly as a result of slower unit demand. However, another factor could be looming: A general slowdown of the U.S. and other economies.
“A lot of folks have been talking about a global recession by 2020,” Lineback told SourceToday, noting that, “the global economy really does drive the semiconductor industry much more than in the past.”
So while semiconductor buyers have reason to be optimistic in the year ahead, the larger economic picture will have a significant impact on the sector moving forward.