According to industry sources, IC design firms are conservative about the demand outlook for the first half of 2023, as inventory adjustments for their downstream customers in the PC and mobile phone markets took longer than expected, Digitimes reported.

Sales of laptops, other PCs, mobile phones and other consumer electronics have so far been disappointing in the second half of 2022, the sources said, already prompting supply chains to start adjusting inventories.

Sources said IC design houses intend to be cautious about placing orders with pure-play foundries in the first half of 2023 as end-market demand shows no sign of recovery. Fabless companies have slowed the pace of orders for the rest of the year.

Some IC design companies had previously said that demand would start to pick up in the fourth quarter, but now it's becoming uncertain. The expected recovery in demand may not occur until the first half of next year, the sources said.

IC design firms tend to hold cash as end-market demand declines rapidly in the second half of 2022, the sources said. Second- and third-tier foundries have started offering price discounts for additional orders, but new deals are still difficult to come by, the sources said. Pure-play foundries, on the other hand, have seen their fabless customers increasingly take a wait-and-see approach to order commitments, but not all foundries have agreed to significant price cuts.