As we begin to settle into the second quarter of 2011, we also begin to see bolder forecasts for what may come. Of particular note, and an on-going topic of discussion, is what is happening in the equipment market. The equipment market is a good gauge of how demand and supply balances may be faring from the manufacturers' view point. Considering this sector, it looks as though growth definitely characterizes the present state of the industry, particularly for secondary market equipment for 300mm and 200mm fabs.
SEMI and Semico recently released a report, 'Secondary Semiconductor Equipment Market Study' (view and access here). This report, compiled from a broad set of data with good industry coverage, underscores the growth in production that confirm the revenue data we've begun to see come in from markets and recent positive forecasts. The report shows that "secondary market equipment sales reached [US] $6.0 billion in 2010, a 77 percent increase over 2009." Secondary equipment represents 13% of total equipment spending, according to the sources.
As we reported last week here at Smith's MarketWatch, growth in the LED sector is strong. The same group, SEMI, released their latest Opto/LED Fab Forecast here which forecasts a 40% LED fab equipment spend increase for 2011 due to diverse demand drivers.
In contrast, the analog IC market is forecasted to slow during 2011, but to rebound by 2014, as forecasted last week by Databeans, and reported on here by EETimes Asia. While this report is not at the fab level, which the others are, it is based on the manufacturing capacities that received CAPEX investments last year and which are to come online during 2012, according to EETimes Asia.
An obvious question then is, what is the general growth rate for the global semiconductor industry presently? A few analysts have thrown their forecasts in the 9-10% CAGR range for the 2011-2013 period, as reported here by EETimes. The fuel behind the growth is seen as coming from the first time purchases by the new middle and working classes in emerging economies.
Counterbalancing these reports and forecasts is the question of a foundry glut in the making by the leading-edge players. With the emerging economies' consumers, it is unlikely that the high-end electronics are the ones that are going to be in the highest demand categories, yet these players are engaged presently in significant CAPEX plans. As EETimes Asia cites Gartner here, "The foundry market is driving aggressive fab expansion plans which will result in an oversupply situation in the foundry market by late 2011 or early 2012." The blame is placed squarely on the four major foundry companies, TSMC, Globalfoundries, Samsung and UMC, according to the Gartner research. Supporting these foundry glut forecasts is Gartner's recent global PC shipments report which showed a 1.1% decline in 1Q11 year-over-year from 1Q10, as cited here by EETimes. "This is below Gartner's previous forecast of 3 percent growth [for worldwide PC shipments] in 1Q11. […]Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics." The mature markets are seen as particularly behind this decline, with the US showing a 6.1% decline for the first quarter year-over-year period.
Watching the emerging economies' demand for new electronics will be critical this year and for the foreseeable future. Here at Smith's MarketWatch, we are monitoring the macro-economics of the present supply and demand situation and will continue to provide you with our compiled analysis of what is happening within our industry.