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.
It’s that time of the month again; namely, time for an “early showing” of next month’s global semiconductor sales forecast updates for both 2011 and 2012 as gleamed from October’s “actual” sales expectation range via exercising the ‘look ahead’ forecasting capability of the Cowan LRA forecast model.
The soon to-be-announced October 2011 global semiconductor sales result should, therefore, be influential in determining the sales growth expectation for the full year of 2011. In particular, one can ascertain whether 2011 will exhibit positive yearly sales growth for the industry or will it turn negative as a number of market researchers have recently forecasted based upon downward fourth quarter sales guidance recently announced by many semiconductor suppliers in reporting their third quarter financials?
Therefore, presented here is a “snap shot” of 2011’s global semiconductor sales and sales growth forecast prospects as a function of October’s possible “actual” sales forecast estimate range as derived via the Cowan LRA forecasting model that I have developed and previously shared. Moreover, the model has been extended in order to include a view of what 2012?s sales growth prospects might look like thereby providing a five quarter look ahead horizon that allows the model to also capture the four quarters of 2012.
It should be mentioned that October 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 Monday, December 5th.
In advance of the WSTS’s release of its October HBR, here’s a monthly “what if” outlook analysis. The analysis leverages the Cowan LRA forecasting model, which projects worldwide semiconductor sales for 2011 (as well as 2012) by providing a “look ahead” scenario for year 2011’s sales forecast range as a function of October’s assumed range of “actual” global semiconductor sales estimates.
The output of this “look ahead” modeling analysis is detailed in the scenario analysis matrix displayed in the table below. A discussion of the model’s results is provided in the paragraphs immediately following the table.
To facilitate the determination of these “look ahead” forecast numbers, an extended range in assumed October 2011’s “actual” sales is selected a-priori. In this month’s scenario analysis outlook, an Oct. 2011 sales range from a low of $23.948 billion to a high of $26.948 billion, in increments of $0.250 billion, is pre-selected as listed in first column of the table.
This best-guess, “what if” estimated range in assumed “actual” sales numbers is selected around October’s actual sales forecast expectation of $25.448 billion as gleamed from last month’s Cowan LRA Model run (based upon September’s WSTS published “actual” sales number). The corresponding October 3MMA sales forecast estimate expectation is projected to be $26.416 billion. (NOTE – this assumes no, or very minor. revisions to either August’s or September’s previously published “actual” sales numbers released in last month’s HBR by the WSTS).
The overall year 2011 sales forecast estimate corresponding to each one of these pre-selected October sales numbers over the range of “actual” sales estimates is calculated by the model, and is exhibited in the second column of the table.
The third column lists the associated yr-o-yr sales growth estimates for 2011 compared to year 2010’s global semi sales of $298.315 billion as reported by WSTS. The fourth and fifth columns show the corresponding October 3MMA, three Month Moving Average, sales forecast estimates and the associated 3MMA year-over-year sales growths relative to October 2010’s 3MMA sales of $26.200 billion, respectively.
The sixth column lists the model’s Momentum Indicator, MI, which is defined as the percentage delta between the actual October sales result and the previous month’s (November) sales forecast estimate for October. Finally, the seventh and eighth columns reveal 2012’s forecasted sales and sales growth estimates associated with last month’s October sales forecast estimate expectation, respectively.
Therefore, as the above scenario analysis table lays out, depending on the actual WSTS (to-be-released) October 2011 global semiconductor sales number, the forecasted full year 2011 sales estimate as determined by the model could vary between a minimum of $305.3 billion and a maximum of $309 billion. Thus, the corresponding 2010 to 2011 sales growth forecast estimate would then vary between a low of 2.4 percent and a high of 3.6 percent, respectively. Moreover, the table also reveals the model’s expectations for 2012’s sales and sales growth forecast estimates, namely $329.4 billion and 7.2 percent, respectively.
Consequently, employing the above described “look ahead” analysis capability, the model can generate a “sensitivity output” of the “expected” year 2011 sales range (and a yr-o-yr sales growth range) as a function of the yet-to-be-announced (but, in this case, assumed) October 2011 ‘actual’ sales number. Therefore, using this scenario matrix outlook table, one can “select” an anticipated October sales number (in the pre-selected range shown) and immediately see what the model would predict for year 2011’s sales forecast estimate along with its corresponding sales growth expectation well in advance of the actual (to-be-published) October 2011’s sales result.
Finally, stay tuned for the WSTS to post its October 2011 HBR (anticipated on or about December 5th, 2011) and thus the ‘actual’ sales number. Once released, the reader can then easily ascertain the model’s latest forecast results as abstracted (or extrapolated) from the provided table (above) even before the Cowan LRA forecasting model is put through its paces and I subsequently publish the latest, updated forecast numbers.
Note: For comparison purposes last month’s previously published Cowan LRA Model’s sales growth forecast estimates for both 2011 and 2012 based on September 2011’s “actual” sales (of $29.442 billion) are summarized in the table here.