Chip Market Researchers Turn Bullish
David Lammers, News Editor -- Semiconductor International, 6/2/2008 9:02:00 AM
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Gartner Inc. (Stamford, Conn.) upped its chip sales forecast for all of 2008 to $286.5B, a 4.6% increase from 2007 revenues of $273.9B. In February, Gartner had forecasted a 3.4% increase for 2008.
Richard Gordon, research vice president at Gartner, said, “It was widely assumed that the slowdown in the U.S. economy that began in mid-2007 would reduce demand for electronics goods and, by extension, semiconductors in 2008. However, while we are still forecasting low single-digit growth for the semiconductor market in 2008, this has more to do with supply-side factors than weakness in demand.”
However, Gartner is predicting continued ups and downs over the next few years for semiconductor revenues, with a compound annual growth rate (CAGR) of 4.9% between 2007 and 2012.
The Semiconductor Industry Association (SIA, San Jose) said April chip sales were 5.9% higher than April last year. For the first four months of this year, sales of $82.9B were 4.3% higher than the first four months of 2007, despite continuing weakness in the memory sector. Excluding sales of memory devices, April semiconductor sales grew by more than 12% year-over-year. Strong unit sales of both DRAMs and NAND flash were offset by “price attrition,” resulting in a 14% decline in total sales of memory products.
SIA President George Scalise said sales of PCs are expected to increase 10% this year in unit terms, and wireless handsets are predicted to increase ~12%. “Growth in these two important end markets is increasingly driven by sales outside the United States,” Scalise said.
Malcolm Penn, CEO of Future Horizons (London) reported that average selling prices (ASPs) have been improving over the first quarter of 2008. “The fact that ASPs were essentially flat on Q4 is a clear vindication of our belief that the IC ASP trend has finally stopped falling,” Penn wrote in a report issued in late May, with the headline “Stop Agonising the Numbers…Time for Bold Actions & Basics.”
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| Future Horizons predicts stronger average selling prices, leading to improved profits by the chip industry. (Source: Future Horizons) |
The Future Horizons report argued that the slowdown in the economies of the developed world “is being offset by the continuing growth in the newly emerging regions, themselves now significant consumers of electronic products, as witnessed by where firms like Nokia and Intel are growing their revenues fastest. Unless the world really does slip into recession, the current economic trends are more than enough to support a strong semiconductor market.”
Foundries and IDMs may be able to boost profits if improving ASPs continue. “The overall impact on the chip industry will be a dramatically needed — and long overdue — boost to profitability, growth and morale,” Penn wrote.
