Semiconductors are important components in electronic devices and particularly in electric and self-driving vehicles. Reuters
Semiconductors are important components in electronic devices and particularly in electric and self-driving vehicles. Reuters
Semiconductors are important components in electronic devices and particularly in electric and self-driving vehicles. Reuters
Semiconductors are important components in electronic devices and particularly in electric and self-driving vehicles. Reuters

Semiconductor sales to drop 3.6% in 2023 on poor consumer demand, Gartner says


Alkesh Sharma
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The global semiconductor market, which was upended by Covid-induced supply chain problems in 2020 and last year, is projected to drop 3.6 per cent in revenue next year on poor consumer demand and weakening economy, a report has found.

Semiconductor revenue is forecast to reach $596 billion next year, down from the previous prediction of $623 billion, US research company Gartner said.

However, the market is on pace to grow 4 per cent this year to $618 billion.

“The short-term outlook for semiconductor revenue has worsened,” said Richard Gordon, vice president at Gartner.

“Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”

Semiconductors are important components in electronic devices and, particularly, in electric and self-driving vehicles. They are used to manage functions such as navigation and parking, and for monitoring engine performance.

Car makers, particularly, have been affected as the lack of chips had halted production in factories around the world.

The global semiconductor shortage will drive nearly 50 per cent of the top 10 car makers to design and produce their own chips by 2025, Gartner said in an earlier report.

Supply chain disruptions, severe chip scarcity and trends such as electrification of vehicles and autonomy, will propel manufacturers to reduce their reliance on traditional chip makers. This will give car makers more control over their product road map and supply chains, according to Gartner's latest report.

Worldwide chip sales surged 26 per cent to hit an all-time high of $553 billion last year, making the wider electronic component industry one of the winners from the pandemic, Euler Hermes, a subsidiary of German financial services company Allianz, said in a report this year.

Currently, the semiconductor industry is divided between consumer-driven markets and enterprise-driven sectors.

Market weakness is due mainly to a decline in disposable income caused by rising inflation and interest rates, Gartner said.

It is also affected by the reprioritisation of consumer discretionary spending to other areas such as travel, leisure and entertainment, which are having a negative knock-on effect on technology purchases.

Meanwhile, enterprise-driven markets such as networking, computing, industrial, medical and commercial transportation, have, so far, been relatively resilient, despite a looming macroeconomic slowdown and geopolitical concerns.

“The relative strength in the enterprise-driven markets comes from strategic investments by corporations that are looking to strengthen their infrastructure to continue supporting their work from home workforce, business expansion plans and ongoing digitalisation strategies,” Mr Gordon said.

The memory chip market, in particular, is witnessing faltering demand, swollen inventories and customers pressing for considerably lower prices. As a result, the market will remain flat this year and is forecast to decline 16.2 per cent in sales in 2023.

The worsening economic outlook is also negatively impacting smartphone, personal computers and consumer electronics production which is positioning the DRAM (dynamic random access memory) chip market for oversupply during the first three quarters of 2023.

Gartner expects DRAM revenue to decrease 2.6 per cent to reach $90.5 billion in 2022 and a further decline of 18 per cent next year to reach $74.2 billion.

Though the deterioration in the macroeconomic environment will weaken consumer demand, Gartner expects relatively better semiconductor consumption from business investments.

“Consequently, markets such as industrial, telecom infrastructure and data centre will be less impacted by consumer sentiment and spending in the short term,” Mr Gordon said.

The ongoing chip shortage and increasing future demand are expected to help chip makers such as Intel, Qualcomm and GlobalFoundries among others.

GlobalFoundries, the world's third-largest semiconductor manufacturer owned by Abu Dhabi's Mubadala Investment Company, capitalised on the market conditions and listed on New York's Nasdaq in October last year to raise $2.6 billion.

  • GlobalFoundries' chief executive Thomas Caulfield at the start of trading of the company's shares on the Nasdaq, on Thursday, in New York. Photo: Screengrab
    GlobalFoundries' chief executive Thomas Caulfield at the start of trading of the company's shares on the Nasdaq, on Thursday, in New York. Photo: Screengrab
  • Mubadala Investment Company chief executive Khaldoon Al Mubarak, left, with Mr Caulfield, and right, Ahmed Al Idrissi, chief executive of direct investments at Mubadala and chairman of GlobalFoundries, on Thursday. Photo: Screengrab
    Mubadala Investment Company chief executive Khaldoon Al Mubarak, left, with Mr Caulfield, and right, Ahmed Al Idrissi, chief executive of direct investments at Mubadala and chairman of GlobalFoundries, on Thursday. Photo: Screengrab
  • GlobalFoundries employees celebrate the debut of its shares trading on Nasdaq. Photo: Screengrab
    GlobalFoundries employees celebrate the debut of its shares trading on Nasdaq. Photo: Screengrab
  • A GlobalFoundries sign in Times Square in New York City on Thursday. Photo: Screengrab
    A GlobalFoundries sign in Times Square in New York City on Thursday. Photo: Screengrab
  • GlobalFoundries employees joined the senior executives for the ceremony. Photo: Screengrab
    GlobalFoundries employees joined the senior executives for the ceremony. Photo: Screengrab
  • GlobalFoundries employees celebrate the debut of its shares trading on Nasdaq. Photo: Screengrab
    GlobalFoundries employees celebrate the debut of its shares trading on Nasdaq. Photo: Screengrab
  • The IPO of GlobalFoundries raised nearly $2.6 billion amid strong demand from investors.. Photo: Screengrab
    The IPO of GlobalFoundries raised nearly $2.6 billion amid strong demand from investors.. Photo: Screengrab
  • Khaldoon Al Mubarak, chief executive of Mubadala, which has owned and backed GlobalFoundries since its creation in 2009. Photo: Screengrab
    Khaldoon Al Mubarak, chief executive of Mubadala, which has owned and backed GlobalFoundries since its creation in 2009. Photo: Screengrab
  • Ahmed Al Idrissi, chief executive of direct investments at Mubadala and chairman of GlobalFoundries. Photo: Screengrab
    Ahmed Al Idrissi, chief executive of direct investments at Mubadala and chairman of GlobalFoundries. Photo: Screengrab
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Pool A Dubai Hurricanes, Bahrain, Dubai Exiles, Dubai Tigers 2

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Opening fixtures

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SUNDERLAND 2002-03

No one has ended a Premier League season quite like Sunderland. They lost each of their final 15 games, taking no points after January. They ended up with 19 in total, sacking managers Peter Reid and Howard Wilkinson and losing 3-1 to Charlton when they scored three own goals in eight minutes.

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Until Derby came along, Sunderland’s total of 15 points was the Premier League’s record low. They made it until May and their final home game before winning at the Stadium of Light while they lost a joint record 29 of their 38 league games.

HUDDERSFIELD 2018-19

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FULHAM 2018-19

Terrible in different ways. Fulham’s total of 26 points is not among the lowest ever but they contrived to get relegated after spending over £100 million (Dh457m) in the transfer market. Much of it went on defenders but they only kept two clean sheets in their first 33 games.

LA LIGA: Sporting Gijon, 13 points in 1997-98.

BUNDESLIGA: Tasmania Berlin, 10 points in 1965-66

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Tax authority targets shisha levy evasion

The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.

Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".

The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.

He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.

"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.

As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.

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Timeline

2012-2015

The company offers payments/bribes to win key contracts in the Middle East

May 2017

The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts

September 2021

Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act

October 2021

Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence 

December 2024

Petrofac enters into comprehensive restructuring to strengthen the financial position of the group

May 2025

The High Court of England and Wales approves the company’s restructuring plan

July 2025

The Court of Appeal issues a judgment challenging parts of the restructuring plan

August 2025

Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision

October 2025

Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange

November 2025

180 Petrofac employees laid off in the UAE

Updated: November 30, 2022, 5:30 AM