The memory market, which makes up more than one-fifth of the total, is seen falling 17%, World Semiconductor Trade Statistics said Tuesday.

While chipmakers have expanded output in response to a supply crunch, consumer demand for devices like smartphones and computers appears to be declining.

Adding to the downward pressure, tech giants like Microsoft and Amazon.com are scaling back investment in data centres as their earnings show signs of faltering.

Growth in global server shipments is expected to slow to 2.8% in 2023 from 5.1% this year, researcher TrendForce reports. Servers are one of the biggest uses for memory chips.

Automotive and industrial semiconductors remain in high demand. The wide range of applications for semiconductors makes the market a leading indicator for the economy as a whole.

Japan, the US and Europe will see growth in 2023, WSTS predicted. But a 7.5% decline is forecast for the rest of the Asia-Pacific region including China, which is the world’s largest semiconductor market and accounts for over 30% of the total.

China’s influence means the global semiconductor market could face an even steeper decline in 2023 than what WSTS is forecasting now.

The Chinese government’s attempt to contain the coronavirus pandemic with tight restrictions has had an impact on factory output. Meanwhile, the US is pursuing tougher curbs on chip technology exports to China.