Two other important data sets came out last week: Semiconductor Industry Association's (SIA) February worldwide chip sales, and Manufacturing Market Insider's (MMI) final 2008 growth rates for the EMS sector (in MMI Volume 19, No.3).
SIA's numbers confirm what we've all felt: worldwide semiconductor chip sales were down 30.4% (US$14.2 billion) year-over-year (YoY). This is a significant decline from January's 7.6% decrease YoY, but continues to be part of an ongoing correction in our industry, as well as in most global industries. According to George Scalise, President of SIA, "while it would be premature to conclude that the sales decline has hit bottom, there are some indications that the rate of decline has moderated from the final quarter of 2008."
MMI's data are more positive, though only in the context of the recent severe macro-economic crisis we're going through. MMI recently published (in MMI Vol. 19, No.3) their yearly survey of the 50 largest EMS providers worldwide (companies with a minimum of US$209 million in sales in 2008). On the bare face of the data, we should be celebrating, as this group showed impressive sales of US$158.5 billion, or growth of 14.6% YoY. Yet, as MMI astutely cautions, there are confounding variables that significantly lower this number:
1. Flextronics 2007 sales of Solectron; considering these data, the total 2008 growth is lowered by almost half to 7.7%;
2. The "Hon Hai Effect" - Hon Hai Precision Industry, the largest EMS provider, accounted for 39% of 2008 sales; adjusting for this effect by removing the Hon Hai sales, further lowers the 2008 growth rate to 1.4%.
While 1.4% is not a number we want to hear, it is realistic and rings true. Importantly though, even this slight positive growth speaks to the ability for the EMS sector to grow in one of the worst cycles our industry and global economy has seen.