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VincePG
I’d be somewhat leery of growth predictions from semiconductor research ...
goafrit
The reality is that the industry can grow 30% and no job will be created in the ...
ISuppli again raises semiconductor forecast
Dylan McGrath
8/2/2010 9:37 AM EDT
SAN FRANCISCO—Market research firm iSuppli Corp. again raised its forecast for the semiconductor market this year, saying it now expects revenue for the industry to hit $310.3 billion, up 35 percent from 2009.
The forecasted $80.7 billion increase compared to last year would be the largest annual increase in dollar terms in the semiconductor industry's history, according to iSuppli (El Segundo, Calif.). Last week, rival market research firm IC Insights Inc. (Scottsdale, Ariz.) also predicted that chip industry revenue would rise by a record amount in 2010.
Last week, market research firm VLSI Research Inc. also raised its forecast for the 2010 chip market, saying it expects the market to increase by 30 percent this year despite looking market uncertainty.
In May, iSuppli predicted that the semiconductor market would grow 31 percent this year.
Dale Ford, senior vice president at iSuppli, said in a statement that the 2010 chip market was already set for strong growth due to consumer demand for electronic products, but that growth is looking better than expected because of several factors, including rising prices and inventory build ups.
"All this is causing chip revenue to bulge to awesome dimensions this year," Ford said.
The forecasted semiconductor revenue growth is based on a strong increase in the sales of electronic equipment, iSuppli said. Factory OEM revenue for electronic equipment is projected to grow by $131 billion to reach $1.54 trillion in 2010, up 9.3 percent from 2009, the firm said.
Following deep cost and inventory cutting efforts in 2009, the semiconductor industry has been pushing to build up stockpiles across the supply chain to support the strong growth in demand for electronics, iSuppli said. This also has enhanced semiconductor growth beyond what end demand would seem to dictate, according to the firm.
"Careful management of semiconductor inventories and tight controls on manufacturing capacity have resulted in an environment where supply is not able to match demand," Ford said. "As a result, prices for many semiconductor segments are inflated."
Every major chip category is projected to grow by more than 25 percent in 2010, iSuppli said.
Next: No double dip
The forecasted $80.7 billion increase compared to last year would be the largest annual increase in dollar terms in the semiconductor industry's history, according to iSuppli (El Segundo, Calif.). Last week, rival market research firm IC Insights Inc. (Scottsdale, Ariz.) also predicted that chip industry revenue would rise by a record amount in 2010.
Last week, market research firm VLSI Research Inc. also raised its forecast for the 2010 chip market, saying it expects the market to increase by 30 percent this year despite looking market uncertainty.
In May, iSuppli predicted that the semiconductor market would grow 31 percent this year.
Dale Ford, senior vice president at iSuppli, said in a statement that the 2010 chip market was already set for strong growth due to consumer demand for electronic products, but that growth is looking better than expected because of several factors, including rising prices and inventory build ups.
"All this is causing chip revenue to bulge to awesome dimensions this year," Ford said.
The forecasted semiconductor revenue growth is based on a strong increase in the sales of electronic equipment, iSuppli said. Factory OEM revenue for electronic equipment is projected to grow by $131 billion to reach $1.54 trillion in 2010, up 9.3 percent from 2009, the firm said.
Following deep cost and inventory cutting efforts in 2009, the semiconductor industry has been pushing to build up stockpiles across the supply chain to support the strong growth in demand for electronics, iSuppli said. This also has enhanced semiconductor growth beyond what end demand would seem to dictate, according to the firm.
Historical and projected IC revenue growth. Source: iSuppli Corp.
"Careful management of semiconductor inventories and tight controls on manufacturing capacity have resulted in an environment where supply is not able to match demand," Ford said. "As a result, prices for many semiconductor segments are inflated."
Every major chip category is projected to grow by more than 25 percent in 2010, iSuppli said.
Next: No double dip
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Rich Krajewski
8/2/2010 5:22 PM EDT
...the semiconductor market would growth 31 percent this year." That's okay. I also mowth the lawn and blowth my own horn.
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resistion
8/2/2010 10:17 PM EDT
2009 is too easy a baseline to grow from. Looks like suddenly slowing growth in 2010-2011.
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RogerMel
8/2/2010 10:40 PM EDT
OOh let's wait for half the year to be over and then predict growth...big Wip.
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Neo1
8/2/2010 10:56 PM EDT
Suddenly memory seems to be driving the semi's business and that makes me wonder, Is this growth fueled by core demand or some filling of backlogs?
I don't think we had anything interesting other than iPad this year and those big upcoming 3D TV's don't use memory like PC market.
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yalanand
8/2/2010 11:20 PM EDT
Surprising....just 2 days back TSMC predicted market peaked out but iSuppli has different set of expectation.
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Warren
8/3/2010 12:32 PM EDT
A noticeable difference of opinion for a relatively near-term timeframe between TSMC and iSuppli would be interesting.
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Frank Eory
8/3/2010 1:13 PM EDT
Annual growth estimates that get updated every couple months are not likely to be very helpful for planning purposes.
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KB3001
8/3/2010 2:29 PM EDT
According to the article, some of this revenue growth is due to price inflation, but by how much, Dylan? Any unit sales figures?
As for the rest, nobody should be surprised at the uncertainty of the forecasts. The semiconductor industry is not hermetically sealed from the rest of the economy. In the same way as some economists are predicting continued growth of the American/EU/World economy and some are predicting a double dip, the outlook is also uncertain in the semiconductor industry. There are more optimistic voices than pessimistic ones though these days. Let's hope they are right.
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dylan.mcgrath
8/4/2010 12:47 AM EDT
@KB3001- sorry I don't have any hard data on the price increases or unit sales figures. I'm reaching out to the analyst to see if I can get further details.
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Himanshu_Gupta
8/5/2010 1:52 PM EDT
What does it mean for the jobs scenario? Does nearly 30% increase in the revenue would also lead to more jobs in this industry? I am not familiar with the basics of this industry because in for example software tech companies the expected increase in supply already creates a lot of vacancies.
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goafrit
8/8/2010 5:23 PM EDT
The reality is that the industry can grow 30% and no job will be created in the US. Andy Grove's article shows that a typical PhD designer creates 7 jobs in Asia. We can grow anyhow, but the jobs will not come in the US, but overseas. So, that is the difference with all these rosy numbers that make those looking for jobs cry 'my country, why not help me'
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VincePG
8/9/2010 2:07 PM EDT
I’d be somewhat leery of growth predictions from semiconductor research companies, particularly coming off a very bad year. Research companies only know one form of growth curve and that’s a hockey stick. “ISuppli projects that the industry will enjoy seven sequential quarters of growth before a seasonal downturn occurs in the first quarter of 2011, the firm said. “ This is August 2010. 2009 saw little or no growth. Predicting a downturn in 1st quarter 2011 isn’t much of a prediction. If this is true, then this kind of predicts a double dip, doesn’t it? I did a fast survey of historic growth predications for semiconductors in 2008(On the Web a prediction never dies. Isn’t it great?) and some predictors(will remain nameless) were still predicating 7-8% growth for 2009 even as late as 3rd quarter 2008. Then you see the revised stats coming out in 2009. Predicting what will happen in 2009 in 2009, what kind of predicting is that?. What would have been really valuable if someone came out early in 2008 and foresaw the iceberg 2009 was going to be. That’s what we pay for, but we never get it. We all buy the research stats because we need them to make some kind of estimate of how our business will be, since it takes too much time to do the research ourselves. 2010 should be a good year, since being in August, we can see it. 2011 and a double dip, who knows, but if inventories are building then that is prediction of a slowing 2011. A better predictor might be unemployment stats and how many people are in Best Buy or Frys buying electronics and how much the retailers are discounting to sell. The recent article about Android phones overtaking iPhones in 2012 is very positive. Competition means more semis sold, which is good no matter how you slice it.
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