Will global semicon industry see growth in 2013?

February 2, 2013

How will the global semiconductor industry perform in 2013? After a contrasting spell of predictions for 2012, I see no change in 2013! So, what’s the answer to the million-dollar question posed as my headline? 🙂

Global electronics industry.

Global electronics industry.

After a disappointing and challenging 2012, global semiconductor executives believe that the worst is nearly behind them, and they are making investments to position their companies for a sustained, broad-based, multi-year recovery in 2013, as per a KPMG global semiconductor survey.

On Feb. 3, the Semiconductor Industry Association (SIA) announced that worldwide semiconductor sales for 2012 reached $291.6 billion, the industry’s third-highest yearly total, ever but a decrease of 2.7 percent from the record total of $299.5 billion set in 2011. Total sales for the year narrowly beat expectations from the World Semiconductor Trade Statistics (WSTS) organization’s industry forecast.

The World Semiconductor Trade Statistics (WSTS) estimated that the global semiconductor market in 2012 will be $290 billion, down 3.2 percent from 2011, followed by a recovery of positive 4.5 percent growth to $303 billion in 2013.

The worldwide semiconductor revenue is projected to total $311 billion in 2013, a 4.5 percent increase from 2012 revenue, according to Gartner Inc. The worldwide semiconductor revenue totaled $298 billion in 2012, a 3 percent decline from 2011 revenue of $307 billion, according to preliminary results by Gartner.

The outlook for the global semiconductor industry in 2013 will likely be 7.9 percent, according to Future Horizons. It means, the industry will likely grow to $315.4 billion in 2013. The Cowan LRA foreasting model put out the following sales and year-on-year sales growth numbers for 2012 and 2013: $292.992 billion (-2.2 percent) and $309.244 billion (+5.5 percent), respectively.

Databeans expects 2013 will see a rebound, with the semiconductor industry growing by 7 percent from 2012 totals to reach $313.04 billion. IDC forecasted that the worldwide semiconductor revenues will grow 4.9 percent and reach $319 billion in 2013.

IHS iSuppli claimed that the semiconductor silicon revenue will close 2012 at $303 billion, down 2.3 percent from $310 billion in 2011. The projected decline comes in contrast to the 1.3 percent gain made last year.

IC Insights forecasted 6 percent IC unit growth for 2013 based on expectations of global GDP to rise to 3.2 percent. According to IC

Source: VLSI Research, USA.

Source: VLSI Research, USA.

Insights, in 2017, China is expected to represent 38 percent of the worldwide IC market, up from 23 percent, 10 years earlier in 2007. Does this mean the USA and Europe are loosing their sheen?

The global semiconductor industry may record only 1.5 percent growth In 2013, as per The Infornation Network. There is, however, the possibility for a snap-back in revenues for 2013, irrespective of macroeconomic factors, such as what occurred in 2010.

Over the next three years, industry analysts estimate the global industry will grow approximately 6 percent 2013-2016 CAGR, according to Somshubro Pal Choudhury, managing director, Analog Devices India Pvt. Ltd.

Late 2012, I was speaking with Dr. Wally Rhines, chairman and CEO, Mentor Graphics. He said: “After almost no growth in 2012, most of the analysts are expecting improvement in semiconductor market growth in the coming year. Currently, the analyst forecasts for the semiconductor industry in 2013 range from 4.2 percent on the low side to 16.6 percent on the high side, with most firms coming in between 6 percent and 10 percent. The average of forecasts among the major semiconductor analyst firms is approximately 8.2 percent.”

WSTS also anticipates the world market to grow 5.2 percent to $319 billion in 2014, with healthy mid single digit growth across most of geographical regions and semiconductor product categories, supported by the healthier economy of the world.

Lastly, Forbes said that 2013 will be a turning point for the global semiconductor market.

Quick look at Asia
First, the November 2012 reading for the Purchasing Managers’ Index for the electronics sector highlighted the problem for Singapore’s economy in 2013, which now expects lacklustre growth. As per the Singapore Economic Development Board, electronics, chemicals and precision engineering clusters forecast lower output in the first quarter of 2013 compared to a quarter ago in view of low demand arising from slow economic growth in Europe and US.

The World Bank raised East Asia outlook, and sees China growing 8.4 percent in 2013. However, Japan’s electronics sector warned of dire outlook in 2013.

For China, which accounts for about 15 percent of global sales of consumer electronics, Moody’s expects annual sales growth to slow significantly to a low- to mid-single-digit percentage level in the second half of 2013 from the current pace of about 10-15 percent due to the expiration of a new subsidy program and lower GDP growth.

As per Taiwan’s DRAMeXchange, there are five trends to watch out for in 2013. These are:
i) Samsung, SK Hynix and Micron to grow stronger and dominate the market.
ii) Mobile and server DRAM will become market mainstream while production for PC DRAM decreases.
iii) 20nm and 30nm technology will become mainstream in 2013.
iv) Taiwanese DRAM makers to quit PC DRAM market in 2013, transition to specialty DRAM and foundry business.
v) Production cuts taking effect, 2013 momentum to bring new opportunities.

So, what and who to believe? 😉 Different firms have come up with different numbers! Will 2013 see the global semiconductor industry breach the $300 billion mark? Let’s see!

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  3. Mike Cowan
    February 2, 2013 at 10:20 pm

    Hi Pradeep – excellent overview detailing what the various semiconductor industry market researchers/watchers have prognosticated for semiconductor sales for 2012 and 2013. Also, thanks for including the Cowan LRA Model’s expectations in your summary.

    I should point out that 2012’s final sales number will be released next week (first week in February) by the WSTS when the Dec. 2012 HBR is posted on their website. This will officially close out 2012’s actual sales result and thus yield a final year-over-year sales growth number for 2012 relative to 2011. Obviously, with 2012 sales “cast in concrete for posterity”, one can therefore forecast a more accurate 2013 sales growth forecast estimate since the base (2012’s final sales result according to the WSTS) will be fixed.

    Mike Cowan (Developer of the Cowan LRA forecasting model)

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  7. February 4, 2013 at 12:34 pm

    Ok, so the SIA also has numbers… $291.6 billion for 2012, which is below the $299.5 mark in 2011!! And it says that there has been ‘near-record’ sales! 🙂

    • Mike Cowan
      February 4, 2013 at 1:05 pm

      Hi Pradeep – YES the SIA is “forever” the optimist; always providing a “positive slant.” But, remember who the SIA represents – the semiconductor industry!

    • February 4, 2013 at 1:20 pm

      Hi Mike: Positive ‘slants’ are fine as long as they “actually” end up being positive! 😉 Well, best wishes to the semiconductor industry… 🙂

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