Waning hardware demand to wipe nearly $70bn from chipmaker revenues

Revenue in the global semiconductor industry is set to plummet by more than 11% over the next year as waning business demand for hardware impacts manufacturers. 

An analysis from Gartner this week projected an 11.2% decline in revenue to around $532 billion, marking a significant decrease from a market total of $599.6 billion in the year prior.

A key factor in the predicted revenue contraction is the consistent decrease in demand witnessed across the PC, tablet, and smartphone semiconductor markets, which Gartner warned is ‘stagnating’. 

Tightened budgets at businesses worldwide mean that semiconductor manufacturers will be faced with an increasingly competitive and strained marketplace. 

These combined markets will account for around 31% of all semiconductor revenue in 2023, totalling $167.6 billion. 

“As economic headwinds persist, weak end-market electronics demand is spreading from consumers to businesses, creating an uncertain investment environment,” said Richard Gordon, practice VP at Gartner. 

Gordon added that a rampant oversupply of semiconductors will also have a significant impact on the market. 

This saturation of chips is “elevating inventories and reducing chip prices” across the board, which in turn will accelerate the decline of the market across 2023. 

Tough conditions for hardware demand

Demand for IT hardware has been consistently decreasing in recent months due to deteriorating economic conditions. 

Research from Gartner in January revealed that global PC shipments declined to record levels in the final quarter of 2022, dipping to 65.3 million and representing an overall decline of 28.5%. 

Budgetary constraints among global businesses, combined with a growing trend of firms delaying purchases and extending lifecycles were all highlighted as key contributing factors, Gartner said at the time. 

This trend has continued into early 2023, analysis shows. Earlier this month, IDC revealed that global PC shipments dipped by nearly one-third in the first quarter of 2023, highlighting this continued decline. 

The research from IDC showed that total shipments of PCs declined 29% in Q1 to 56.9 million units. IDC said that weak demand, excess inventory, and a “worsening macroeconomic climate” were responsible for the drop in shipments.