Chip sales worldwide set to cool more than expected

SEOUL • Chip sales are set to cool more than previously expected as the world economy struggles under the weight of rapid interest rate increases and rising geopolitical risks, fuelling fears of a global recession.

World Semiconductor Trade Statistics (WSTS), a non-profit body based in the United States that tracks shipments in the industry, lowered its market outlook to 13.9 per cent growth this year from the previous 16.3 per cent. It sees chip sales rising just 4.6 per cent next year, the weakest pace since 2019.

The market is still expected to surpass US$600 billion (S$838 billion) this year, WSTS said. Next year's forecast growth would be the weakest since a 12 per cent drop in sales at the height of the US-China trade war.

Chip sales are an important indicator of global economic activity as households and companies increasingly rely on digital devices and online services to consume and expand. US President Joe Biden this month signed the so-called Chips and Science Act aimed at strengthening the US semiconductor industry even as China races to expand its own chipmaking capacity.

Japan will probably see the strongest sales growth at 5 per cent next year, followed by the Americas at 4.8 per cent and the Asia-Pacific at 4.7 per cent, according to WSTS. Europe, where Russia's war in Ukraine is reverberating across the continent's economy, will most likely post an expansion of just 3.2 per cent.

The International Monetary Fund last month downgraded its global growth forecast and said next year may be tougher than this year. A Bloomberg Economics model sees a 100 per cent probability of a US recession within the next 24 months.

WSTS includes among its members Texas Instruments, Samsung Electronics, Sony Semiconductor Solutions and Yangzhou Yangjie Electronic Technology, according to its website.

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