Strong semicon industry recovery likely in 2010!

November 7, 2009

If all of the industry analysts are to be believed, the semiconductor market recovery has begun! Nearly all of them have been forecasting a recovery in the global semiconductor market as well. Let’s take a look at their predictions.

* According to IC Insights, the top 20 suppliers’ sales show back-to-back 19 percent growth rates! In fact, four of the top 20 — Samsung, Toshiba, Qualcomm, and MediaTek are likely to show sales growth this year!

* As per Databeans, the Americas was the first to post growth for semiconductors from the same quarter a year ago, up 8 percent. Worldwide, Q3 came in down 10 percent from 2008, but up 20 percent sequentially. This puts the market on target with our current prediction of $217 billion, a contraction of 13 percent from 2008. Databeans is also still predicting that the 2010 revenue will be up 17 percent from this year.

* The Semiconductor Industry Association (SIA) is projecting worldwide sales of $219.7 billion for 2009, a decline of 11.6 percent from the $248.6 billion reported in 2008. Forecast projects that sales will grow by 10.2 percent to $242.1 billion in 2010 and by 8.4 percent to $262.3 billion in 2011. Worldwide sales of semiconductors in the quarter ended September 30 were $61.9 billion, an increase of 19.7 percent from the prior quarter when sales were $51.7 billion, it reported.

* According to DRAMeXchange, 3Q09 DRAM revenue increased 40.7 percent to $5,719 million. Samsung, Hynix, Elpida, Micron and Nanya (of Taiwan) make up the top 5 positions.

* Worldwide silicon wafer area shipments increased significantly during the third quarter 2009 when compared to the second quarter 2009 area shipments according to the SEMI Silicon Manufacturers Group (SMG) in its quarterly analysis of the silicon wafer industry. Total silicon wafer area shipments were 1,972 million square inches during the most recent quarter, a 17 percent increase from the 1,686 million square inches shipped during the previous quarter. The new quarterly total area shipments are 13 percent below third quarter 2008 shipments.

* Malcolm Penn, chairman and CEO of Future Horizons says that Q3-09 chip growth has set the stage for 22 percent surge In 2010 vs. 2009! The market rebound started at the end of Q1, with Q2 coming in at 17 percent sequential growth. With Q3 now up a further 20 percent and Q4 market guidance in the 5 percent to 7 percent range, the 2009 market is set to close out at between $220-225 billion.

* Although global semiconductor revenue is set to decline in 2009 for the second consecutive year, quarterly year-over-year growth is expected to finally return to the market in the fourth quarter, signaling the start of the industry recovery, according to iSuppli Corp. As iSuppli previously announced, global semiconductor revenue is set to contract by 16.5 percent in 2009.

* A note of caution from The Information Network, which said that semiconductor equipment billings were at 1994 levels as semis continue to underspend! Much of the problem in its opinion is the transition from 200mm to 300mm diameter wafers. Also, semiconductor companies, let by International Sematech, are pushing for a transition to 450mm wafers, which in our opinion will be the death knell for a large number of equipment manufacturers. It is critical that semiconductor equipment manufacturers boycott 450mm development. The Information Network also indicated that the “salad days” are over for the equipment industry.

* Late September 2009, the EDA Consortium (EDAC) Market Statistics Service (MSS) announced that the EDA industry revenue for Q2 2009 is $1,125.5 million, a 5.6 percent sequential decline from Q1. Since Q3 results are awaited, and as Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics, said, “As the electronics industry recovers, and its R&D spending increases to come in line with its growing revenue, the EDA industry would be expected to recover as well.”

* According to iSuppli, foundries played the semiconductor survivor in 2010. It reported that although the global semiconductor foundry market is set to make a welcome return to growth in 2010 after a terrible 2009, the recent downturn is likely to thin the ranks of the top-tier pure-play suppliers down to just three major players in the future,

There you have it! All of the semiconductor pundits are pointing toward a recovery in 2010!

However, there are some questions that remain unanswered, for now.  iSuppli also reported that there has been no double booking in this semiconductor recovery in late 2009 at least. Will this scenario remain? For how long? Or, will those same old mistakes be made once the industry is back to being healthy?

Will there be renewed interest in the move toward 450mm fabs? What happens to all those companies making equipment for 300mm fabs, should that happen?

Will the companies re-write their business plans, as advised by Future Horizons’ Malcolm Penn?

In all of these good tidings, there is some discomfort hidden deep down!

Oh, one last point! What happens to all of those folks who got laid off during the longest recession of our times? Will they be re-instated?

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