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Global semiconductor sales forecast results: Cowan LRA model

June 12, 2009

This is a continuation of my coverage of the fortunes of the global semiconductor industry. First of all, I’d 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.

The latest forecast estimates, as derived via exercising the Cowan LRA Model, are based upon the recently-released April 2009 actual global semiconductor sales by the WSTS (note — includes, by the way, very minor upward revisions — i.e., an increase in sales — for each one of the previous three months of the year: Jan., Feb., and Mar.).Source: Mike Cowan

As the high-level results table portrays (see above), the year 2009 sales forecast estimate “kicked up” strongly (by $8.52 billion) to $192.50 billion from last month’s sales forecast estimate of $183.99 billion with a corresponding improvement (increase) in the 2009 year-on-year sales growth forecast to minus 22.6 percent (from last month’s sales growth forecast estimate of minus 26 percent).

It should be pointed out that this latest updated sales growth forecast estimate (-22.6 percent) is in good agreement with the latest forecast revisions just released by Gartner (-22.4 percent), the WSTS (-21.6 percent), and the SIA (-21.3 percent).Source: Mike Cowan

Sales growth forecasts
It should also be highlighted that this month’s momentum indicator improved (increased) significantly to plus 19.6 percent. This is relatively good news when compared to the actual monthly momentum indicators from Oct08 through Jan09, that is, -12 percent, -26 percent, -35 percent, and -31 percent, respectively.

Historical tracking of this particular indicator over the past seven years is also available. The historical long-term trend correlates with the significant collapse in industry sales during the time period just mentioned; a corresponding reversal looks to be in the making based upon this month’s strongly positive momentum indicator (record high positive percent since Cowan has been running the model and tracking this particular indicator).

With this month’s momentum indicator (MI) moving into very high, positive territory, it bodes well relative to a possible relatively strong recovery in sales over the near-term.

Cowan mentioned in his last month’s analysis, that this monthly indicator bears continued watching over the coming months in order to monitor the trend in this indicator — in order to verify that the present very strong uptick is highly suggestive that a “turning point” in the industry’s near term sales is real and will be sustained.

However, the model’s next month (May 2009) predicted sales forecast estimate is projected to be $14.686 billion which would represent a yr-o-yr monthly sales growth of -27.5 percent — not very encouraging relative to sustainability of a sales improvement trend if the model’s May09 sales forecast is born out.

Time will tell! And, stay tuned for next month’s update.

P.S.: I will be getting into further conversations with Mike Cowan, as well as Future Horizons’ Malcolm Penn this month.

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