The chip industry will once again fall into difficulties.

Future Horizons' latest market update states that the European semiconductor market is currently in a state of decline and is particularly vulnerable. Malcolm Penn, Chairman and CEO of market research firm Future Horizons, stated in the quarterly semiconductor market update, "There is a great deal of uncertainty this year." He forecasts that the semiconductor market will grow by 15% in 2024 and by 8% in 2025 as the economy begins to decline. "Every warning light is at least flashing amber, if not red," he said. He said, "The initial forecast for 2024 was 16%, but things have taken a turn for the worse since January. It's been a very dramatic shift, a turbulent period." "The situation in Europe is not very good. Historically, when the market has been in recession, Europe's industrial and automotive sectors have remained strong. But things are not the same now. Europe entered a recession about a year later than the rest of the world, and now we are seeing negative growth there." Although spending is slowing down, the surge in semiconductor capacity spending remains a significant risk. "46.5% of total capital expenditure goes to China, which produces only 10% of the units. There are several areas of concern because the capital expenditure is going into more mature technologies, analog, and microcontrollers. The most affected regions are Europe and Japan, not the US. "All of China's investments are focused on 300mm technology, while most countries in the world focus on 200mm technology. Competing with the cost structure of 300 mm will be very difficult. This may force traditional companies to upgrade, meaning building new factories because the ceilings aren't high enough to accommodate 300 mm equipment, which may lead to more consolidation or more surplus equipment," he said. It is expected that before the semiconductor market in Europe recovers, an economic downturn will occur in early 2025. "A death cross will signal another industry downturn," he said. "It's unlikely to happen this year, but likely in the first quarter of 2025. We are facing some dangers. Optoelectronics and discrete devices are performing poorly, every electronic product has discrete devices, and the microcontroller market is contracting and showing negative growth. The analog market has also experienced 17 months of negative growth, which is a key indicator for the industry." "It takes six months to control inventory, and it takes a long time to absorb 20% of excess capacity, but we are increasing capacity, so our excess capacity may continue into 2025 and even longer." He said that although Intel will continue to struggle, Moore's Law will continue to drive the industry forward. "Moore's Law has been killed more times than Dracula, but it is not dead, not even ill. Dennard scaling has ended, that's for sure, but that was never Moore's Law. We are now building many 3D structures, both vertical and horizontal, and these roadmaps are very secure in the next 10 to 15 years," he said. "Intel faces significant challenges," he said. "They are struggling, losing money, and laying off employees, which is not a good sign." "When you fall behind, it takes ten years to catch up. In my semiconductor heart, I hope they succeed because they have lost their way. Technically, if they can recruit talent, they should be able to do it, but engineers also want to work for successful companies facing technological challenges." But in the chip manufacturing sector, TSMC and Samsung need to have fierce competition. "What we need is not just competition between two companies, which is not good for the industry," he said. This article is excerpted from "Observation of the Semiconductor Industry"; GMTEight Editor: He Yucheng.