The analysts are getting bullish, but are they turning a blind eye to concerns over Q3 and the seasonal dip in Q4.
The roller-coaster global market for chips is back to "healthy" growth, according to analyst Bill Jewell at Semiconductor Intelligence LLC, based in Dallas.
The company has increased its estimate for 2014 annual growth to 15 percent from the previously given 12 percent but is sticking to 6 percent annual growth in 2013.
Jewell has collated the forecasts of several market analysis firms (in the chart below) and observed that there is a diverse range of opinion for growth in 2013, ranging from 2.1 percent from World Semiconductor Trade Statistics to "up to 10 percent" from Objective Analysis. The spread for 2014 is even larger, ranging from 2.9 percent given out by IDC to "over 20 percent" from the bullish Objective Analysis.
Semiconductor market forecasts mid-2013. Source: Semiconductor Intelligence.
The average for the 2014 forecasts is 9.4 percent, Jewell tells us, which is much greater than the long-term compound annual growth rate for the semiconductor market, which was 5.8 percent over the period 2004 to 2010.
Jewell's analysis does depend on two more good quarters averaging about 6 percent sequential growth, which he argues is achievable given the Q3 forecasts of leading chip vendors.
However, that does not seem to take into account some of the rumblings about an oversupply of 28-nm chips and more generally in the smartphone sector. (See TSMC Forecasts Tepid Q3.)
According to calculations made by EE Times based on WSTS data, the 10-year average of sequential growth in Q3 and Q4 is 8.7 percent and -1.7 percent, respectively. This would produce global chip sales in Q3 of about $80.99 billion and in Q4 of $79.61 billion. The full-year total of $305.70 billion would represent an increase of a more modest 4.8 percent.
My experience of market analysis is that it is almost impossible to call anything much beyond two or three quarters unless you are in the middle of a big recession or boom, and of course you never know when you are in the middle, so for me 2014 remains a mystery.
Jewell at Semiconductor Intelligence argues that an improving global economy in 2014 will be the driver and references the International Monetary Fund's July forecast, which sees global real GDP growth going up from 3.1 percent in 2013 to 3.8 percent in 2014. He argues that while China's GDP growth at 8 percent is below the past 10 percent average, other emerging markets are stepping up to replace the Chinese demand, including Eastern Europe, Russia, India, Latin America, and elsewhere in southeast Asia.
Real GDP percentage growth. Source: IMF via Semiconductor Intelligence.