1Q09: The "Bottom" of the Current Semiconductor Industry Cycle
In order to compile "real time" evidence that a cyclical bottom was reached in 1Q09, gathered semiconductor company financial data from Strategic Reviews Online Database is presented in a market research report available at Electronics.ca Publications "The McClean Report 2009 Edition". Second-quarter 2009 guidance from 48 semiconductor suppliers was combined with the report's estimates for 13 "top 25" companies (61 companies in total). It should be noted that, not including the five pure-play foundries, the remaining 56 companies in the research represent about 75% of the worldwide semiconductor market.
It was very enlightening and encouraging to read the comments from many of the companies in the survey. When reviewed, words and phrases like "stabilizing, improvement, bottom, expansion, inflection point, and better than expected" came up often and lend credence to our opinion that a turning point has been encountered in the semiconductor industry. Over the next few months, it will be refreshing to hear the discussion regarding the semiconductor market shift focus from, "where is the bottom?" to, "how strong will the recovery be?"
According to the research, the top 25 semiconductor suppliers are expected to display an 8% increase in 2Q09/1Q09 sales, 4% excluding the foundries. Guidance from the "other" semiconductor suppliers in our survey (i.e., non-top 25) is even more encouraging than that of the top 25 companies. In total, the "other" 36 companies expect to register a strong 13% increase in 2Q09/1Q09 sales! In all cases, the 2Q09 expectations for the "other" companies were provided by the companies themselves.
The "Grand Total" of the 61 companies in our survey shows a 9% increase in semiconductor sales expected for 2Q09/1Q09. Excluding the pure-play foundries, the 2Q09/1Q09 growth rate drops to a still respectable 5%, especially considering that the 1Q09/4Q08 and 4Q08/3Q08 semiconductor markets declined by 12% and 23%, respectively.
A further breakdown of the 2Q09/1Q09 semiconductor sales expectations of the 61 companies is shown below:
32 IDM Companies: +4% ($30.8B/$29.6B)
24 Fabless Companies: +8% ($6.5B/$6.0B)
5 Pure-Play Foundries: +82% ($3.64B/$2.00B)
It should be noted that when a range of expectations was given by a company for its 2Q09 outlook, which was the case about 90% of the time, the report incorporated the mid-point of this range. Historically, most companies are very conservative in their stated expectations, since it is much better to beat your guidance than to fall short (this is especially true for publicly traded companies). Thus, given the inherent conservatism in the guidance:
The report forecasts that the 2Q09/1Q09 semiconductor and IC markets will actually register a higher growth rate than the survey's "Grand Total" result of +5%.
Details of the new report, table of contents and ordering information can be found on Electronics.ca Publications' web site. View the report: http://www.electronics.ca/reports/ic/icin302.html
Electronics.ca Publications is a world-class research network and publishing company whose focus is technology and market research for the electronics industry. Our network spans dozens of areas of electronics expertise, and taps the knowledge of researchers and analysts internationally. We deliver critical information on the semiconductor, advanced materials, nanotechnology, electronics manufacturing, wireless technology and converging markets, to name a few.
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