The end of the first fiscal quarter for 2012 brings with it data on how the year actually started off, where spending is headed, and whether the tea leaf reading may come to fruition. The latest major data sets to be released are again from SIA and SEMI.The SIA data for semi spending show the expected cyclical decline in global semiconductor sales for January. More specifically, January experienced a 2.7% month-over-month decline, down to US $23.1 billion, as a three-month moving average (3MMA), from December 2011, which had US $23.8 billion in global semiconductor sales. This slight decline in the month-over-month numbers is in line with historical trends and is not seen as heralding any industry weakness. Rather, the forecasts continue to be optimistic for a strong pick-up during 2H12, based on improved economic conditions in the US, final resolution and to the Thailand flooding, and (hopefully) stabilization of the EU economic situation (see the SIA report here for more details and the full data chart).
SEMI's recent reports survey the semiconductor equipment spending data, further fleshing out our discussion last week of supply chain forecasts in light of SIA's latest SICAS data. SEMI forecasts fab spending to be flat for 2012, which is an increase from early 2012 forecasts of slightly negative semi equipment spending for fabs. The data underscore both the improved economic forecasts as well as the increased competition among the major companies as the field narrows and the tussle for top manufacturers continues. As the SEMI report argues here:
"While the outlook for fab equipment spending in 2012 was negative two months ago, key spenders like Samsung increased spending to record levels; Hynix increased spending in 2012 by 23 percent to about US$ 3.75 billion, while UMC increased spending from $1.6 billion to $2.0 billion. In addition, Intel increased spending much more than expected, to a historic high of about $12.5 billion. If macroeconomic factors improve and other companies adjust their capex plans, then equipment spending for 2012 could even cross into positive territory."
Presently, SEMI forecasts a 0% increase in year-over-year (YoY) fab equipment spending (combining both new and used equipment at the global level) for 2012, but a jump of 17% increase in spending for 2013. Still a far cry from the major jumps in 2010 (132% increase after the global 2008-09 recession) and 2011 (23% increase), but the trending is improving and solid, which is the best news.
Capacity increases are expected to stay at a modest level, according to SEMI, which echoes what we have been reporting. This is not the case for NAND Flash though, which due to increased demand and the lack of increased capacity recently, is now facing a supply situation that is triggering increases in installed capacity, according to the analysis from SEMI: "While installed capacity for DRAM is expected to level out, Flash capacity is growing rapidly between 2010 and 2013. The dedicated foundry sector will also undergo growth in installed capacity with the key contributors like TSMC, Globalfoundries and UMC." Additionally, as we continue to see economic rebounds and with that consumer confidence and spending increases, it is likely that the conservative equipment spending that we've seen will also trigger similar installed capacity growth for other semi sectors as well, notably Foundry and System LSI, according to the same report.
At a more detailed level, SEMI's recently released monthly, book-to-bill data for the North American semi equipment sector is continuing the month-over-month steady rise since September 2011, now reaching a 0.95 ratio level, healthy territory for this data point. As January's billings and bookings numbers show, parity between the two numbers is being reached (that's when you end up at the 1.0 book-to-bill ratio), meaning that for every $1 booked, $1 was received in billings for the month. For January, the 3MMA billings amount reached US $1.24 billion, a ~4.7% decrease month-over-month, while bookings increased to US $1.18 billion, a +7.0% increase month-over-month. To sum up the importance of the present book-to-bill results, SEMI offers the following statement:
"'In January 2012, North American equipment makers experienced their fourth consecutive month of improvement in orders,' said Denny McGuirk, president and CEO of SEMI. 'While year-over-year bookings and billings are lower than in 2011, the current outlook for equipment spending in 2012 has improved over the past couple of months.'"
All in all, the data from across the industry, at sector, market and industry-wide global views are pointing to very favorable conditions as we move closer and then into the forecasted rebound period for growth, 2H12.