The most recent, preliminary October book-to-bill numbers out for North American and Japan-based semi equipment manufacturers point to a slowing in bookings. When we couple these data with the recent price declines of DRAM, the question then begs, where’s the market headed as we approach the heat of the holiday season? Certainly in light of these numbers, one might see significant cause for concern, but how much bearish news is there given the backdrop of months of bullish rebound?
While North American bookings do exhibit an initial slowing, the bookings continue to climb at a reasonable pace. Having just exited a tumultuous September, and taking into consideration the skittishness of forecasters still, the cautious bookings shouldn’t be seen as a red flag. While this holiday season is not expected to be a bullish, record-breaking period, there are enough products and geographic drivers to support continued growth and positive forecasts. So while a few are finding reason to mark this as a downturn (cf. here and here), the more holistic view offers a cyclical pattern which will see continued seasonal growth, given the present market drivers.
What is truly interesting presently is the broader question of the upcoming impact that the successful adoption of tablets coupled with cloud computing and anywhere connectivity is having globally (see, for example, this recent report from iSuppli pertaining to tablets and smart phones). Not only are smart phones seeing continued healthy demand and sales numbers, but there is a global demand component as well. Emerging economies' new consumers and their increasing purchasing power are supporting low-cost smart phones. The smart phone driver is closely coupled with the growth in tablets and the strong demand for the recent tablet versions, which are based on smart phone designs rather than laptop designs (cf. this recent MarketWatch Quarterly article). These device trends go hand in hand with an important IT movement, cloud computing. The ability to access the variety and density of data that people are demanding is not only available through the supporting NAND and related ICs, but also through the ability to store and access data and programs through the cloud.
More than a software trend, cloud computing is having significant impact on a variety of semiconductor sectors, including automotive, personal and corporate computing, mobile, healthcare, and education (cf. these iSuppli reports here and here for auto-infotainment examples). For the semiconductor industry, this serious trend is one that will bear fruit, from the holiday season demand for tablets, next generation smart phones, in-car navigation and auto-infotainment (cf. this report by QNX Software Systems in EETimes), as well as webTV devices, among others.
As we move forward, there is less cause for bearish concern than one month's bookings numbers. While 2010 has been a notable growth year and unlikely to soon be surpassed in terms of year-over-year forecasting, there are many reasons to have confidence in continued growth for in-demand components and sectors (cf. the most recent and the upcoming MarketWatch Quarterly for related articles).