Smith Market Blog

Robust Retail Sales Support Strong IC Demand in 4Q10


The early news for this last quarter of the year (4Q10) is, so far, strong.  As DigiTimes reported on 11/5/10, retailers are reporting improved September and October sales for consumer electronics (CE) beyond tablets and smart phones.

Inventories have returned to normalized levels and the demand is seen as continuing through the remaining two months of the year, with possible carry-over into the early part of 1Q11.  Furthermore, the present trending means that additional orders for November and December are expected and that the IC demand is, thus far, looking to post a significantly strong 4Q10, particularly for North America and Europe where demand was questioned to be softening.  Asian CE forecasting has been less worrisome, as demand has continued to be relatively strong, albeit expectedly cyclical for the region, with particular growth noted in the newer emerging economies.

Supporting these data, iSuppli also released here strong statements defying the negativity heard throughout 3Q10 and with positive growth for 4Q10 for the PC market, in particular.  iSuppli principal analyst Matthew Wilkins added this strong statement to their report:  "From warnings issued by Taiwanese motherboard makers, to word of declining exports from China, to mounting concerns over consumer spending, there has been a drumbeat of negative news regarding the PC market. […] However, even with consumer confidence shaken by government austerity measures, individuals and businesses continued to purchase PCs in the third quarter, driving up global shipments smartly."

Concurrent with these positive semi data, SIA recently released both their quarterly report on global semiconductor sales here and their forecast for 2010 through 2012 here.  The quarterly report showed a global, quarter-on-quarter increase of 6.1% from 2Q10, and a monthly increase for September of 2.9%, based on three month moving averages (3MMA).  Again, inventories were reported as being in-line with demand.  These data certainly cohere with our market experiences for the same periods, and solidify the positions we took during earlier posts in 3Q10 that the concerns being voiced were overly cautious.

The 2010-2012 SIA forecast is particularly noteworthy, showing continued growth year-over-year for the period, albeit slowing from the accelerated growth this year (understandable given where we were a year ago plus).  According to SIA here, they are "projecting record sales of $300.5 billion in 2010, an increase of 32.8%.  The forecast calls for sales to grow by 6.0% in 2011, to $318.7 billion, followed by an increase of 3.4% to $329.7 billion in 2012.  The projected compound annual growth rate is estimated to be 13.4% for the period 2009 through 2012."

Couple these strong data points to a number of North American retailers' adoption of 'Black Friday' sales events throughout the month of November, and we are expecting to see a good finish to what has been a strong 2010.

Lisa Ann Cairns, Ph.D.
Written on Friday, 05 November 2010 00:00 by Lisa Ann Cairns, Ph.D.

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