Situation of the French semiconductor market at 2nd quarter 2024
Paris, September 26, 2024 – The French semiconductor market contracted by 8% in the second quarter compared with the previous quarter, to €545 million, according to Acsiel Alliance Electronique. This is a more pronounced decline than that of the European market as a whole (-3% according to WSTS). For the first half of the year, the French market is down 19% on the same period in 2023, and this year-on-year decline is having a significant impact on distribution (-23%) as well as direct sales (-16%).
In the second quarter, the sequential decline in direct sales was driven by all the major segments of the French market, i.e. smart-card, Aerospace/Defense, automotive and industrial (listed here in descending order according to their contribution to the decline). The major product families with a strong presence in these market segments (Analog, MOS Micros, MOS Logic) are unsurprisingly the ones to bear the brunt of the decline in direct sales. The Sensors/Actuators and Discretes families, on the other hand, recorded weak growth, the impact of which was insignificant.
The French market has been trending downwards for six quarters. As a result, the sliding annual average index is at its lowest level since the third quarter of 2022 (see attached graph).
The causes of this economic slowdown are manifold, and have been clearly identified by the sector’s manufacturers. Firstly, the inventory correction has not yet been completed, contrary to expectations at the start of the year. This applies in particular to retail sales, which hit record highs in 2022 and 2023, and to the vast industrial segment, which accounts for the majority of retailer sales to end customers. The automotive segment, meanwhile, has been hit by the unanticipated drop in sales of 100% electric vehicles, with a shift to hybrid and internal combustion vehicles, where semiconductor content is lower. Strong competition from China is increasing the pressure on the European automotive industry, with direct repercussions for the entire electronics sector. The defense sector is facing strong demand, but production is not always keeping pace, which can lead to jolts in demand for components.
The French semiconductor market is therefore in a difficult situation, as is the European market as a whole, which has just experienced three consecutive quarters of sequential decline. It’s worth noting that the situation in the German electronic components market is even more worrying than that of the French market. Against this backdrop of falling sales in Europe, the rising cost of raw materials represents an additional difficulty.
Of course, the longer-term forecast for the electronics industry remains very positive. This is why industry players believe that it is more necessary than ever to amplify and accelerate the construction of a European policy favorable to productivity and investment. We must never lower our guard in the face of competition from outside Europe. Strong and rapid action by the European Commission in this direction is absolutely essential to the pursuit of this strategy of sovereignty.
Quarterly trends in the French market since 2010, in indexes, annual moving average – Source #ACSIEL