SAN JOSE, Calif. - Market research firm IC Insights Inc. disagrees with the new IC forecast from the Semiconductor Industry Association (SIA). As reported, the SIA raised its forecast. The SIA projects record sales of $300.5 billion in 2010, an increase of 32.8 percent over 2009. The forecast calls for sales to grow by 6.0 percent in 2011, to $318.7 billion, followed by an increase of 3.4 percent to $329.7 billion in 2012.
In June, the SIA released an updated industry forecast that projected worldwide chip sales would grow by 28.4 percent to $290.5 billion in 2010. The forecast projected 6.3 percent growth in 2011 to $308.7 billion, followed by 2.9 percent growth in 2012 to $317.8 billion.
In contrast, IC Insights' forecast for total semiconductor growth is 31 percent for 2010, 11 percent for 2011, and 10 percent for 2012.
Bill McClean, president of IC Insights, issued the following comments about SIA's new IC forecast:
''Overall, the SIA forecast for 2012 looks like the "death" of the semiconductor industry, and we couldn't disagree more!
What really strikes me about the SIA forecast is how pessimistic it is for 2012 at only 3.4 percent. One of the big problems I have with the forecast is the lack of assumptions. What are the unit volume and average selling price assumptions behind this forecast? What are the capital spending and thus capacity forecasts behind these market forecasts. What about worldwide GDP and electronic system sales. All of these assumptions are needed before you can put any stock in any semiconductor market forecast, including ours.
In IC Insights opinion, 2012 has tremendous upside potential for the semiconductor industry. In two years, the U.S. economy could be growing rapidly as unemployment shrinks from 9.6 percent now to maybe 7.6 percent in 2012. If unemployment is moving downward, the rest of the people that have jobs will be optimistic about the future and spending could surge. The U.S. economy depends more on the mindset of the 90 percent plus people that have jobs than on a few percentage points of reduced unemployment. Also, 2012 is a U.S. re-election year and the economy usually does well in election years.
Not to get too focused on the U.S., but China, India, Latin America, etc. are demanding increasing amounts of electronics as their populations purchase more cellphones, PCs, TVs, automobiles, etc. This is a wave of tremendous power and it will be gaining momentum over the next few years, not losing momentum.
With IC unit volumes on pace to follow their historical 8-10 percent growth rate per year, you would need steep declines in semiconductor average selling prices to have only 3 percent market gains. With capital spending as a percent of semiconductor sales hovering around the very low figure of 15-16 percent (even after this year's surge in spending), the semiconductor industry is nowhere near the overcapacity levels that would drive prices down this much, and it is unlikely to encounter significant overcapacity over the next few years.''
SIA discussing average selling prices or capacity forecast is called antitrust or price fixing because SIA is an organization of competitor semiconductor companies. SIA SHOULD NOT be discussing prices or capacity.
Business friendly probably has little to do with it. Disposable income is the name of the game in the USA. W/O demand, folks with jobs working in the USA, things will be tight. Offshore that is a different market, if you are watching the numbers that is the growth area. But there is already a dark cloud, look at memory prices, they are tumbling. Same old cycle?
I can't imagine the industry slowing down now that the US elections are over and it looks like a more business friendly environment will begin with the new congress. This should translate into growth and with that sales should increase. Those that are employed will at some point start buying again. They have held off some purchases for awhile waiting to see how the election turned out. Now they may start to feel better about job futures and this may kick up the overall outlooks. What does everyone else think?
These contradicting forecasts should not come as a surprise to us. Economic forecasts are all the over the place lately due to the uncertainty over credit, sovereign debts etc. It is psychological more than anything else at this stage I should think. With time, and barring a major sovereign debt crisis or big corporation failure, things should start to look up in a year or two.
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