Archive for July 4, 2010

June ’10 global semicon update: Forget 2010, ~30 percent’s in the bag! What about 2011?

July 4, 2010 Comments off

Here are the excerpts from the Global Semiconductor Monthly Report, June 2010, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. The report also covers market trends. Those interested to know more may contact Future Horizons.

April set the ball rolling for a blockbuster second quarter making what will now be five successive quarters of growth. Our 3 percent Q2 growth forecast looks increasingly timid, with 6-8 percent more likely. Virtually all forecasters are now pitching 2010’s growth at the 30 percent level, so there is little left to argue about other than guessing the exact final number.

Whether the ‘final’ number is 28 or 38 percent really makes no odds; it is the underlying trend that counts, something we forecast correctly over 18 months ago.

The real issue now is “What about 2011?” We are clearly now in a boom and the next phase is bust, but when, how deep and how fast will it collapse? We are currently reappraising this and our 2011 forecast, with the analyses to be presented at our forthcoming IFS2011 Mid-Term International Forecast Seminar in London on 20th July.

Forget all of the intellectual arguments about expanded geographical customer base, broader application range and the smoothing effects these would have, all that is hogwash. The industry boom-bust cycles persist and will continue to do so all the while demand dynamics are measured in weeks and the supply-side in quarters making it impossible to ever balance supply and demand.

Semiconductor industry dynamic: Future Horizons

Semiconductor industry dynamics: Future Horizons

At this point it is pertinent to revive a slide I first presented at the IEEE meeting in Boston in 1975. This slide is as valid today as it was 35 years ago.

After four quarters of growth, the industry now finds itself in the full flood of a classic market boom. Order books are full, customers are building stocks, double ordering is rife, capacity is strained, lead times increasing and deliveries are stretched.

Inventory replenishment started in Q2-2009, due to the severe inventory overdepletion in Q4-2008/Q1-2009, and was over by Q4-2009 to be replaced by inventory building in 1H-2010, driven by lead-time extension. Typically every week of extra lead-time adds at least half a week to WIP.

Double, even triple, ordering (due to supply shortages) only really started in 1H-2010 and is definitely getting worse, but double ordering is NOT double shipping, yet. For that to happen, supply needs to catch up with demand. That leaves just one item missing from the 1975 list … ‘prices stabilise’, the worldwide semiconductor and IC ASP trends. Read more…

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