Semiconductor 3Q23 Update - Industry looks to have bottomed; optimistic outlook

1 Dec 2023
  • Total revenue was roughly flat YoY, with NVDA and ASML the bright sparks. NVDA’s 3x spike in revenue helped to offset weakness in Memory and Foundry.
  • Processor and Memory companies expecting growth to accelerate on AI demand, while Equipment manufacturers still seeing low utilisation rates.
  • Outlook for 4Q23e generally more optimistic, with expectations of a bottoming in the semiconductor industry as demand slowly returns, and inventory levels normalise. Growth is expected to come from increasing AI-related spending on GPUs and Memory.




Processor: CPU sales continued to recover as channel inventory normalised. Global transition towards accelerated computing and AI still driving demand for higher-end Data Centre GPUs. Intel and AMD both posted sales numbers that beat expectations, led predominantly by a normalisation of channel inventory levels. Forward guidance was also quite upbeat, with both companies expecting a re-acceleration in growth for the upcoming quarter due to growing demand and healthier inventory. The expectation is that near-term CPU growth will be led by a PC upgrade cycle due to: 1) Windows 10 end-of-service in sight; 2) higher computing power to support increasingly complex applications. For GPUs, NVDA’s revenue tripled YoY as customers continued to invest heavily in Data Centre GPUs to power accelerated computing applications like inferencing LLMs and developing generative AI applications. NVDA also guided 4Q23e sales growth to continue accelerating, driven by continued growth in customer commitments for its Data Centre GPUs, higher ASPs, and an expanding supply chain.


Memory: Demand for high-performance DRAM grew, driving up ASPs as inventory levels also normalised. Further improvements into 4Q23e as AI-related demand expands. Micron, Samsung, and SK Hynix all reported sequential increases in revenue as: 1)  PC and mobile inventory levels normalised; 2) demand for high-performance DRAM grew; 3) ASPs rose. On a YoY basis, revenue continues to decline, although less than 2Q, with net loss also narrowing YoY vs 2Q23. Production cuts and increasing demand have reduced inventory levels significantly, with prices expected to have bottomed. Demand for High Bandwidth

Memory (HBM) – DRAM, continues to increase for AI servers, while the industry is also seeing increasing demand for high-density NAND products. Traditional server demand remains weak, as Cloud Service Providers (CSPs) focus more on higher-compute AI servers. Looking forward, all 3 companies seem optimistic about a turnaround in the memory segment, driven by AI-related demand for DRAM. Micron guided to revenue growth for the first time in 18 months, while Samsung and SK Hynix intend to increase supply of HBM to support growing customer commitments.


Equipment: Still in a downcycle with low utilisation rates. Positive outlook commentary, although revenue guidance says otherwise. Semiconductor equipment makers continued to see a moderation in orders as the whole industry remained in a downcycle, with customers still very cautious in the current macro environment, elevated upstream inventory level, and low utilisation rates. NAND memory continued to be weak, with softness also in industrial and automotive end-markets. However, ASML, the main supplier of lithography equipment saw healthy growth of 25% YoY due to its strong order backlog of >EUR35bn. AMAT’s revenue was flat, while Lam saw another YoY contraction due to its high exposure to memory customers. All 3 companies were quite positive on their outlook, as they look to increased AI spending trends, and a recovery in the semicon industry, although revenue guidance would indicate perhaps it is still too early to call. China export controls are expected to only have a mild impact.


Foundry: AI-related demand still limited by supply, with recovery in demand from China still slow. HPC expected to drive revenue growth in the long term. TSMC reported a 15% YoY revenue decline for the quarter as customers continue to adjust inventory levels and demand remained muted. Revenue was supported by a strong ramp-up of its 3nm chips, and increasing demand for 5nm used in high-performance computing (HPC). TSMC also saw sequential growth (33% QoQ) in its smartphone segment,  stating that its starting to see early signs of stabilisation in the PC and smartphone end markets (TSMC’s 2 largest segments). TSMC guided for sales to sequentially increase ~11% QoQ, although YoY sales is still expected to be down slightly. For FY24, it expects revenue contraction of ~8-10% YoY, as that robust AI-related demand is still yet to offset overall softness in the semicon industry, with growth in AI-related products still restricted by limited supply. TSMC still expects some customers to continue adjusting inventory levels into 4Q, with a slower-than-expected recovery in demand from China. In the long-term, the company expects HPC to be a major growth contributor as edge devices begin incorporating AI functionality.





About the author

Jonathan Woo
Research Analyst

Jonathan covers the US technology sector focusing on internet companies. Formerly a national and professional athlete, he graduated from the University of Oregon with a Bachelor’s Degree in Social Sciences.

Latest Reports

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066