Last week was the SEMI 33rd annual Industry Strategy Symposium (ISS);SEMI is a leading global semiconductor industry association. At this conference industry analysts and economists alike presented research and forecasts pointing to the significant recovery that the semiconductor industry is expected to face in 2010. However, with these rosey forecasts came a number of cautionary words that the industry supply chain does not appear to be poised to enjoy all of the benefits of this positive projection.
The semiconductor industry has been faring better than many industries based on 4Q09 reports. The 1H10 forecasts continue to show the tendency for pent up demand to be strong from consumer and corporate sales alike. However, with the loss of almost two years of CAPEX investments to support fabs, the growth that we're engaging now may prove to be a tough challenge for the industry because of these "missed investments," as underscored by Bill McClean, President of IC Insights.
According to McClean, IC Insights research and data show that despite the "worst recession in 63 years (since 1946) in 2009, flat PC unit shipments were quite an amazing accomplishment. Moreover, cellphone unit shipments were down only 5%. Now consider that both PC and cellphone unit volume shipments are forecast to increase at double-digit rates in 2010." This begs the following questions from the recent McClean Report: "What effect will this have on the IC industry? Are we on the cusp of an all-out IC market boom for 2010?"
IC CAGRs are forecasted in the 9% range; ASPs and revenue are set to rise across the board for memory, even for DRAM; increased demand is expected for PCs; and emerging economies' consumers are hungry for electronics. Underscoring this positive reality is the recently released, strong, 9% increase in North American-based semiconductor equipment manufacturers book-to-bill ratios, now at 1.03 for December, holding onto a 6-month rise.
The 2010 forecasts are no longer just New Year's dreams. While exciting and welcomed news, these forecasts pose interesting challenges for the industry that must now grapple with being able to meet what TSMC calls "urgent recent increases in customer demand." TSMC has begun both new construction and capacity expansions at their fabs in Taiwan, increased R&D spending for 2010 by 25%, and plan to hire 3,000 new staff, "primarily engineers."
Those companies who remain from the last round of survival of the fittest now have a new, positive battle ahead. Economic indicators are up 1.1% for December 2009 and point to economic growth this Spring. Are we really ready?!