The seventeenth business upturn is simply across the nook
The 2019-22 growth was not the largest in business’s historical past. As Penn put it “it was quantity 11 within the growth hit parade“ with the 2010 growth at 31.8%, the 2000 growth at 36.8% and the 2004 at 28% plus seven different booms all exhibiting greater progress than the one simply ended.
Penn remains to be sticking to the -22% forecast for this yr which he made in Might final yr. He identified that unit shipments are 10% above the business development line of 8% per yr and it’ll take two or three quarters earlier than the stability is restored.
Capex is effectively above regular ranges at 19.8% in comparison with the business common of 14%. The Q2 entrance finish capex was at 17.2%, which was second solely to the 19% of Q1 2001.
ASPs are again right down to Q2 2021 ranges wiping out six quarters of positive factors.
Regardless of all this “the business is stoking capability after we don’t want it,” mentioned Penn, “that’s why we predict there can be a 22% decline. The entire elements are working to undercut the market. There’s not a single ray of hope.”
“Low utilisation will plague H1 23,” added Penn “it’s already at 70 to 80% ranges. Capex has but to peak as demand disappears.”
“Single digit decline is an phantasm,” mentioned Penn “with TSMC speaking about 15 to 16% decline in Q1.”
ASPs and models are all falling and the autumn is nowhere close to an finish with at the least 2 quarters earlier than there’s a touch of a change.
The autumn impacts each reminiscence and logic with the one distinction between the 2 being the quantity of the autumn, mentioned Penn.
Penn had a phrase of recommendation and a phrase of optimism: the recommendation was to double down on R&D and invent methods out of the downturn; and the optimism was: “the seventeenth business upturn is simply across the nook.”