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June 2011 global semicon sales expectation for 2011: Cowan LRA model

July 17, 2011

This is a continuation of my coverage of the fortunes of the global semiconductor industry. I would like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.

June 2011′s “actual” global semiconductor sales number is scheduled to be released by the WSTS, via its monthly HBR (Historical Billings Report), on or about Friday, August 5th. The monthly HBR is posted by the WSTS on its website.

In advance of the upcoming June sales release by the WSTS, Mike Cowan will detail an analysis capability using the Cowan LRA forecasting model to project worldwide semiconductor sales for 2011; namely, the ability to provide a “look ahead” scenario for year 2011′s sales forecast range as a function of next month’s (in this case June’s) “actual” global semiconductor sales estimate.

Source: Cowan LRA model.

Source: Cowan LRA model.

The output of this “look ahead” modeling capability is captured in the scenario analysis matrix displayed in the table below. The details of these forecast results are also summarized in the paragraphs immediately following the table.

In order to facilitate the determination of these “look ahead” forecast numbers, an extended range in possible June 2011′s “actual” sales is selected a-priori; in this particular scenario analysis, a June 2011 sales range from a low of $27.935 billion to a high of $30.935 billion, in increments of $0.250 billion, was chosen as listed in the first column of the table.

This estimated range in possible “actual” sales numbers is “centered around” a projected June sales forecast estimate of $29.435 billion as gleamed from last month’s Cowan LRA Model run (based upon May’s WSTS published “actual” sales number). The corresponding June 3MMA sales forecast estimate is projected to be $25.445 billion. (NOTE – assumes no, or minor. revisions in either April or May’s previously published “actual” sales numbers released last month by the WSTS).

The overall year 2011 sales forecast estimate for each one of the assumed June sales over the pre-selected range of ‘actual’ sales estimates is calculated by the model, and is shown in the second column of the table.

The third column lists the associated year-on-year sales growth estimates compared to year 2010′s actual sales result of $298.315 billion according to WSTS.

The fourth and fifth columns show the corresponding June 3MMA, three Month Moving Average, sales estimates and the associated year-on-year 3MMA sales growths relative to June 2010′s 3MMA sales of $24.809 billion, respectively.

Finally, the sixth column lists the model’s Momentum Indicator, MI, which is defined as the percentage delta between the actual June sales result and the previous month’s (May’s) sales forecast estimate for June.

Therefore, as the above scenario analysis table lays out, depending on the actual WSTS (to-be-released) June 2011 global semi sales number, the forecasted year 2011 sales estimate as calculated by the model might vary between a low of $315.014 billion and a high of $321.309 billion. The corresponding 2010 to 2011 sales growth forecast estimate would then vary between a low of 5.6 percent and a high of 7.7 percent, respectively.

Note: Last month’s previously published Cowan LRA Model’s sales growth forecast estimate for 2011, which was based upon May 2011′s ‘actual’ sales (of $23.494 billion), came in at (plus) 6.7 percent based upon the model’s 2011 sales forecast estimate of $318.391 billion as shown in the table immediately below.

Source: Cowan LRA model.

Source: Cowan LRA model.

Additionally 2Q11′s sales is expected to be $76.336 billion which would result in a quarterly sequential sales growth of 1.1 percent over 1Q11.

Consequently, employing this “look ahead” analysis capability, the model generates a “sensitivity output” of the “expected” year 2011 sales range (and a year-on-year sales growth range) as a function of the yet-to-be-announced (but, in this case, assumed) June 2011 ‘actual’ sales number.

Therefore, using this scenario matrix table, one can “select” one’s own expected June sales number (in the pre-selected range shown) and immediately see what the model predicts for a year 2011 sales forecast estimate along with its corresponding sales growth expectation well in advance of the real (to-be-published) ‘actual’ June 2011′s sales result.

Finally, stay tuned for the WSTS to publish (anticipated on or about August 5th, 2011) its June 2011 ‘actual’ sales number. Once released, the reader can then easily ascertain the model’s latest forecast result as abstracted (or extrapolated) from the provided table (above) even before the Cowan LRA forecasting model is run and he subsequently publishes the latest, updated forecast numbers.

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