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mr. fuse
I don't believe anyone here understands the magnitude of the financial crisis we ...
mr. fuse
wow...Penn's predictions seem to be all over the map. If we were to apply ...
Penn raises 2010 chip market forecast, cuts 2011
Peter Clarke
7/20/2010 2:49 PM EDT
LONDON — With signs of a strong second quarter for chip sales Malcolm Penn, founder and principal analyst with Future Horizons Ltd., has raised his forecast for growth in the global chip industry in 2010 to 36 percent, up from 31 percent, which he gave out in May 2010. However, Penn dropped his prediction for 2011 to 14 percent from 28 percent.
Penn stressed that the change was the result of recalibrating the speed of the recovery from the chip market pause caused by the financial crisis of 2008. As the recovery in electronic and semiconductor sales had been steeper than expected he had been forced to pull sales forward in time resulting in the higher 2010 figure and a more normal 2011 figure. "The fact that 2010 is higher automatically makes the percentage increase in 2011 lower," said Penn stressing that the change was "mathematical rather than a change of the analysis."
Speaking at a mid-year semiconductor market forecast organized by his company Future Horizons (Sevenoaks, England), Penn said: "It was a three-quarter pause, not a boom-bust recession," and emphasized his point by showing a number of graphs of market indicators with the last quarter of 2008 and the first half of 2009 omitted. "2009 was a pause not a bust, 2010 is a restart not a boom and 2011 will be a return to normality."
He also was highly critical of the majority of chip company CEOs for misreading the situation as a classical chip industry bust and allowing that prognosis to inform their risk aversion. "The industry did an appallingly lousy job of managing the experience; too quick to cut back and too slow to resume spending," said Penn.
The market situation in Q3 2010 is now very similar to where it was in Q3 2008, with many positive indicators except that the industry has reduced its chip manufacturing capacity by 14 percent, Penn said. hed added that this would soon start to drive average selling prices (ASPs) up strongly, to the benefit of chip makers and the chagrin of chip buyers.
Penn predicted that the chip market in 2Q10 would come in with 8.3 percent sequential growth. This is roughly in-line with a prediction of 9.4 percent made recently by independent analyst Mike Cowan. But both figures are way ahead of the 2.9 percent Q2/Q1 sequential growth that has been the average over the last ten years.
Penn puts the Q3 sequential growth at between 5 and 10 percent and Q4 sequential growth at between a 2 percent contraction and 3 percent growth. The downside of these projections would give a 2010 annual market of $299.9 billion and 32,5 percent annual growth. Penn's upside projection results in an annual market of $311.4 billion and 37.6 percent annual growth.
"Even a second-half meltdown provides 30-percent growth," said Penn. "The market is set to bust through the $300 billion threshold on December 14, 2010." Penn's 14.2 percent prediction for 2011 growth would put the 2011 annual chip market at $350 billion.
Related links and articles:
www.futurehorizons.com
Penn puzzled as chip ASPs fall during boom
Analysts lag 'actual' chip market growth
Lessons unlearned and Nissan's pigeons
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Baolt
7/21/2010 6:20 AM EDT
Global chip market recovery was so fast that no of the prediction was able to catch up real numbers. In beginning of the year to our local issue with my novice passion i predicted %38 growth to market with assuming locomotives such as mobile hand sets, TV and set-box area, also computing equipments and semiconductor based lighting while some of senior colleagues were underrating my article, however lucky i see now, i was kind of right. We are at the era of mobile, high power computing products and huge TVs, first time in the market 3D ones, and still growing. However this growth is kind of unhealthy one, cause there are no healthy stock levels reached, still very long LTs and still marketing fellows in different semi.co trying to increase prices with different strategies. Current orderbooks are filled for whole year, even for 1Q11. What about mid of even late quarters unclear.
Portly customers of semi.co fellows got, get whatever they wish from founders however EMS, OEM, ODMs are still considered scorn
indeed they are the ones who carries production on future products. I agree with decrease of the market but not so strong one. We have green technology on the scope. Lots of clever phones, pads, e-readers, environment friendly illumination systems are some of the bright areas lying on horizon.
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peter.clarke
7/21/2010 6:43 AM EDT
Well your optimism is refreshing, but I don't think we will hit 38 percent.
However, even if Q3 and Q4 are flat with a $75 billion Q2 we are looking at a $295 billion year and 30 percent growth. That assumes current demand is real and not the result of double and triple ordering. It assumes no sequential growth because chip manufacturing is sold out, and it assumes chip makers don't raise ASPs by changing the mix in their fabs.
The last two are both unlikely. A chip maker can always squeeze a bit more production out of fab and some capacity will come on stream in the second half in any case. Also if you are going to let customers down or put them on allocation anyway you might as well run the products with the highest prices and the biggest margins so ASPs should drift upwards.
As a result, given the above assumptions, a 30 percent growth year is more or less "baked in."
But remember 2010 is a rebound year from a pitifully low 2009. Now that the rebound is almost complete growth will return to "normal." The question remains as to what is normal growth in the global semiconductor market; 5 percent or 15 percent?
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goafrit
7/21/2010 7:10 AM EDT
It is now a pattern that technology leads recovery and also leads recession. When growth comes back, people spend on technology and when otherwise, they cut technology spending. The prediction by Penn is nothing extraordinaire, most understand this pattern. I agree on the 2010 outlook. However, I think his 2011 is wrong. We are going to have better growth that his estimate in 2011 because by then the whole world especially Europe would have normalized.
The fall of Euro will boost growth in Europe and that will possibly help them get out of recession and slowdown quicker through higher export.
In my blog, I maintain 32% global growth in 2010 and 20% in 2011. Let us see who is right. Euro is going to be strong next year while Brazil would have a bubble.
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Cowan LRA Model
7/21/2010 3:30 PM EDT
Hi Peter - I thought I would "chime in" with the Cowan LRA model's Q2/Q3 and Q3/Q4 sequential sales growths based upon the actual May 2010 sales number released by the WSTS at the beginning of this month. The two above mentioned quarterly sales growth estimates are forecast to be plus 6.1 percent and minus 1.0 percent, respectively. These two results compare quite favorably to Penn's invoked ranges, namely, Q3 sequential growth in the range of plus 5 - 10 percent and Q4 sequential growth in the range of minus 2 percent to plus 3 percent, respectively.
Additionally, as you have previously reported, the latest 2010 sales growth forecast estimate put forth by the latest, updated Cowan LRA model run based on May's actual sales result is 34.6 percent.
Mike C. (independent S/C industry analyst and developer of the Cowan LRA Model for forecasting global S/C sales)
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jhchang
7/22/2010 3:15 PM EDT
"Normalization" in Europe is misleading. If history is still a relevant predecessor, I would not be surprised if a stable, full recovery in Europe out of the credit crisis takes a few years minimum. That is what happened in the late 1990s Asia, even with the strong IT export-driven recovery. If you look at the latest housing data and consumer confidence, it does not seem US consumers are too happy either. In addition, 2010 is extremely strong only because 2009 was extremely weak, not only for semiconductors but also for end electronics. We don't have that in 2011. I would be very surprised if we grow more than 10% next year. I would bet more on say 5% or maybe less.
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mr. fuse
8/29/2010 11:08 AM EDT
wow...Penn's predictions seem to be all over the map. If we were to apply semiconductor standard SPC to them, he would lose half of his yield! Dropping his 2011 prediction by 50% is pretty disturbing. Being over half way through the year and making/raising a 2010 prediction is elementary. Having an email conversation with him gave me the impression he believed I was just another yank with visions of grandeur. It now appears he was the one with grandiose expectations and is slamming the industry for his "guestimations" not coming to fruition.
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mr. fuse
8/31/2010 5:29 PM EDT
I don't believe anyone here understands the magnitude of the financial crisis we are about to experience, the depth and breadth of what's coming.
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