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Chip Market Projected to Grow 7%

7/30/2013 07:50 AM EDT
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rick merritt
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Let's hear it for growth
rick merritt   7/30/2013 11:18:18 AM
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I suspect the big Web data centers are another, likely smaller engine for growth in electronics.

It appears Qualcomm, Mediatek and maybe Marvell remain among the best positioned at least for 2013.

wilber_xbox
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Re: Let's hear it for growth
wilber_xbox   7/30/2013 2:14:47 PM
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Rick, that sounds like the right estimate because the market is growing purely on smarphone business so these players will profit. Others will be in red.

rick merritt
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Re: Let's hear it for growth
rick merritt   7/30/2013 4:16:14 PM
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@Wilbur I would not be quite so dire given folks doing well include Broadcom with a broader portfolio of cloud and mobile chips

Frank Eory
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Re: Let's hear it for growth
Frank Eory   7/30/2013 4:29:14 PM
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Strange, the article opens with "Global semiconductor sales are expected to increase by 6.9 percent in 2013" and closes with "Semiconductor demand will remain weak for 2013." So no matter what happens, IDC's forecast will be correct.

mcgrathdylan
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Re: Let's hear it for growth
mcgrathdylan   7/30/2013 6:19:13 PM
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@Frank- Opps. Your comment caught my attention and I realized that we left off a very important word. What she said was PC semiconductor demand would remain weak in 2013. Here is the full quote:

PC semiconductor demand will remain weak for 2013 as the market continues to be affected by the worldwide macroeconomic environment and the encroachment of tablets," said Nina Turner, Research Manager for semiconductors at IDC.


Sorry for the error.

Frank Eory
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Re: Let's hear it for growth
Frank Eory   7/30/2013 7:44:31 PM
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That makes a lot more sense. Glad to be of help :)

Tom Murphy
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Bounce back
Tom Murphy   7/30/2013 12:45:21 PM
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After a year of decline in 2012, a 6.7 percent jump this year seems quite remarkable. What I don't understand is why IDC expects that growth to be cut in half next year. 

Do they see a significant downturn in the offing?  This can't all be due to slower growth in China, if that materializes at all.

wilber_xbox
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Re: Bounce back
wilber_xbox   7/30/2013 2:19:13 PM
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Tom, probably the PC market will decline faster now with tablet becoming more popular. But the reason could be the shelf life of the smartphone which will be sold this year will impact the sales in next year as not everyone will be willing to shell out money on new smartphone.

Tom Murphy
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Re: Bounce back
Tom Murphy   7/30/2013 2:23:38 PM
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Thanks for that, Wilber.  Let's work through that.

Tablets and PCs both use chips. The PC market is declining, but not as fast as the tablet market is growing. So, I'm guessing the net effect is that demand for chips is growing on that level.

Phones? They sell more each year, so chip demand should continue to rise smartly for the foreseeable future.

And let's throw in data centers.  They're growing fast and, while some servers can now handle more data than they used to, the rise of big-data is forcing the addition of many new DCs. So that market is growing faster and faster.

None of those seem to explain why IDC expects half the growth next year that is sees this year?

Aside from an economic downturn, what other factors would account for that?

mcgrathdylan
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Re: Bounce back
mcgrathdylan   7/30/2013 3:13:49 PM
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We all know that the PC market is in declined and will likely never return to the peak levels it experienced a couple years ago. But with tablets and smartphones booming, the net impact of the PC's decline on the semiconductor industry shouldn't be very dramatic. IDC forecasts that chip revenue from the computing segment will grow 2 percent this year, but predicts that chip sales to the consumer segment (including tablets) will be up 15 percent. Not bad.

geekmaster
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Next cyclical downturn
geekmaster   7/30/2013 2:15:57 PM
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2013 is pretty much in line with other market research firms. Their 2014 projection appears somewhat lower than some others. A CAGR of 4.2% until 2017 sounds optimistic. The semiconductor industry experienced cyclical ups and downs. When can we expect the next down? 

Tom Murphy
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Re: Next cyclical downturn
Tom Murphy   7/30/2013 2:26:19 PM
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GoGoGeek: I totally agree on all scores.  If they're so optimistic about this year, why are they less enthusiastic about next year?  An economic downturn is the only think that seems to explain it to me. To answer your question, I guess they see that coming later this year -- if indeed that's the cause. 

Any other ideas out there on why chip sales would fall in half next year?

mcgrathdylan
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Re: Next cyclical downturn
mcgrathdylan   7/30/2013 2:42:37 PM
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I agree with you Tom. IDC gave no specific reason for predicting that growth will slow considerably next year. You'd have to chalk it up to macroeconomic uncertainty. IDC clearly believes that inventories levels have come into balance with demand, setting the stage for a big second half of this year. But there is no specific reason stated for that not carrying through into next year.

mcgrathdylan
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Re: Next cyclical downturn
mcgrathdylan   7/30/2013 2:38:11 PM
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I think the semiconductor industry has to be happy with a 7% rebound, if indeed that turns out to be the case. I worry it may be too optimistic becaue it assumes some pretty healthy growth in the second half. We know the chip makers could use it badly. As for the next down, it's hard to tell. It's not like the old days with the really big volatile swings, is it?

Cowan LRA Model
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Cowan LRA Forecasting Model's 2013 And 2014 Sales Growth Expectations
Cowan LRA Model   7/30/2013 3:42:30 PM
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Hi Dylan - the latest Cowan LRA Model's global semiconductor sales growth forecasts for 2013 and 2014 came in at 4.0 percent and 5.7 percent, respectively. These results are derived from May's sales numbers as posted by WSTS in their monthly (May 2013) HBR which I shared with you back at the beginning of July. These sales growth results correspond to yearly sales forecasts of $303.2 billion and $320.6 billion for 2013 and 2014, respectively. The details behind these forecast estimates as gleamed from the model can be found at the following URL = http://electronics.wesrch.com/paper-details/docx-EL1SE1J5AVTLZ-updated-global-semiconductor-sales-for-2013-and-2014-per-the-cowan-lra-forecasting-model. These two results are obviously less bullish (for 2013) and more bullish (for 2014) than IDC's sales growth forecasts of 6.9 percent and 2.9 percent.

Mike Cowan, independent semiconductor industry market watcher and developer of the Cowan LRA Model for forecastiung global semiconductor sales. 

rick merritt
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Re: Cowan LRA Forecasting Model's 2013 And 2014 Sales Growth Expectations
rick merritt   7/30/2013 4:14:35 PM
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Wow, significzantly less encouraging both in raw numbers and in a sense of confidence in projections given the divergence in the trend line over two years.

Cowan LRA Model
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Dylan - Another Correction Required In Your Article
Cowan LRA Model   7/30/2013 7:26:35 PM
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Hi Dylan (again) - in your third paragraph there were two additional yr-over-yr sales contractions post 2001; namely in 2008 (-2.8 percent) and 2009 (-9.0 percent). However, it should be noted that 2001's sales contraction was quite large, namely down 32.0 percent.

Mike Cowan

mcgrathdylan
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Re: Dylan - Another Correction Required In Your Article
mcgrathdylan   7/30/2013 9:00:47 PM
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Thanks Mike. I appreciate the correction.

elctrnx_lyf
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Re: Dylan - Another Correction Required In Your Article
elctrnx_lyf   7/31/2013 5:55:57 AM
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More and more products are becoming predominately electronic controlled which is increasing the share of the semiconductors market every year.

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