Archive for the ‘semicon capex’ Category

Global semicon industry update: 30 percent growth now on radar for 2010, says Future Horizons

February 3, 2010 Comments off

Here are the excerpts from the Global Semiconductor Monthly Report, January 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.

November’s IC sales continued the year-end rally, down just 2.4 percent on October, up 29.3 percent vs. November 2008. This confirms our earlier prediction that Q4-09 sales would be up around 6.4 percent on Q3-09, one of the strongest year end-closes on record – Q4 sequential growth is typically ‘zero plus minus 2 percent’.

This confirms that 2009 will come in close to our minus 10 percent forecast, most probably at minus 9.7 percent, setting 2010 up for a bumper double-digit growth year. Only a Lehman Brothers-type event can now derail the recovery, the future is bright, and not before time too. For far too long now doom and gloom has spoilt the chip market horizons. Industry faith has been stretched beyond the limit.

Ignoring the structurally (and typically) wild individual monthly fluctuations – which simply means no single month’s data is a good indicator of the underlying trends – November’s result places us comfortably within our minus 10 percent 2009 growth estimate.

Based on November’s WSTS data, it is now very difficult to see anything less than a 22 percent growth year for the semiconductor market in 2010 based on the current industry momentum (i.e. a fourth quarter growth of around 6.4 percent) and a very ‘average’ quarterly growth pattern for 2010. Indeed we are now starting to see the first industry guidance revisions that tend to indicate even this range might be low. If the current growth momentum holds firm, 2010 chip market growth could easily hit 30 percent.

Low double-digit growth is totally out of the question, growth in single digits an absolute impossibility, Figure E3. Either of these scenarios would need a very poor start to the year, which is simply not happening. Order books are strong, inventory levels are low, capacity is tight and demand is holding up. You could not wish for a better start to the year … what a difference from this time 12 months ago. Only a massive economic collapse can now spoil the party.

As we mentioned before, only a massive economic disruption like a Lehman Brothers bankruptcy can now derail the recovery and this is not being forecast by the economists. Quite the opposite, GDP data is trending more and more positively, with an upwards revision at the macro level more likely than not. This is not to say that the economic recovery is not fragile, it is far from out of the woods and many risks still remain.

Of the ‘not so good news’, to our minds the biggest single problem is the world’s financial systems remain unreformed and, worse still, unrepentant. This means the same issues that caused the global financial problem in the first place remain unchecked. In 1929, Wall Street’s shamed bankers jumped from their office windows. In 2009 they stood in line for their bonuses. From a chip market perspective, a sound economic base is important but the correlation is poor.

Whereas a collapsing GDP will trigger a chip market downturn, just as it did in the 2001 dot com bust and September 2008 Lehman Brothers collapse, the rates of recovery are independent of each other. For example, the economy recovered faster than the chip market after 2001 whereas the chip market is leading the recovery in 2009.

The extent of the market collapse can be gauged by looking at the peak to trough data, showing over one third of the chip market simply disappearing overnight. Except ASPs, despite this massive decrease in demand, ASPs help firm, in fact they rose a modest 1 percent. One year after the chip market collapsed, units and value have now recovered to 98 and 90 percent respectively of their Q3-08 (market peak) value, with ASPs coming in just 8 percent lower.

This is quite an extraordinary recovery, seeing as it took a full two quarters more for the world to exit recession. It happens though because there was no chip market bubble prior to the downturn.

With the memory market now in full flood of recovery – we can easily see an upside potential of a $60 billion market for 2010 – and memory prices increasing with barely a flinch from the market, 2010 is set to be a very good year for the industry. The only problem is that no one yet believes it.

Confidence has been shattered ever since the 2000 bust, with a glass half empty mindset dominating collective thinking. “Market growth is now single digit; ASPs will keep on falling; Where are the killer products to drag the chip world out of recession; We need to specialise, merge, narrow the R&D scope, cull the product line and above all dump all the fabs; outsource for capital and operating efficiency; etc”.

Well, to coin a phrase once used by Jerry Sanders III, “Nuts!” It was only 2004 when growth hit 28 percent just after an 18 percent growth in 2003. Better get planning now, it’s already too late. Read more…

18pc Q2 vs. Q1 sequential growth… this improves 2009 to -14pc: Semicon update July. ’09

September 2, 2009 Comments off

Here are the excerpts from the Global Semiconductor Monthly Report, July 2009, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. Those interested to know more about this report should contact Future Horizons.

Fig. E1: 12/12 Worldwide IC Monthly Growth Rates

Fig. E1: 12/12 Worldwide IC Monthly Growth Rates

Figure E1 shows the 12/12 worldwide monthly growth rates for IC sales in dollars, units and ASP for January 1997 to May 2009 inclusive. They need to be looked at in conjunction with the other 12/12 and rolling 12-month charts provided in the Market Summary section of this report.

Following hot on the heels of April’s 16 percent month-on-month sales growth, May grew a further 0.9 percent sequentially (0.4 percent for ICs), putting June on track to break through the US$20 billion barrier, for the first time since the chip market collapsed last September.

It would also set up Q2-09 to show 18 percent quarter on quarter growth, joining only three such precedents in the history of the industry when such a strong second-quarter growth spurt has occurred. The big question now is: “Is this the start of the chip market recovery or a blip on the statistics radar screen?” The short answer is both, the industry’s not out of the woods yet, but the chip market will recover faster than the economy. The stage is now set for a strong market rebound in 2010-11.

We are clearly in the midst of a serious industry recession but different from all previous historical precedents. As we have counselled before, going into this recession (the 12th in the industry’s 60-year history) the industry was in structurally good shape; that is something that has rarely happened before.

In addition, while the economy clearly drives the overall market for semiconductor devices, the correlation is poor meaning chips march to their own drum not just the economic pulse. Both of these factors mean that the chip market can (and will) recover much faster than the economy as a whole.

With the benefit of hindsight, the whole world clearly over-reacted to the 14 September 2008 Lehman Bros collapse, something again with hindsight the US officials probably now regret letting happen, and the massive destocking that followed masked the underlying residual demand. For sure markets too were down but they only declined not evaporated completely. The impact on IC unit demand was a victim of this uncertainty. Read more…

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