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Is the 2012 Rebound at our Doorstep? Forecast increases and other positive momentum


It is not unimportant news that only a few weeks ago the Dow Jones broke through the 13,000 barrier after four-years, Nasdaq this week surged to a 12-year high, pushing through its 3,000 magical barrier on the shoulders of tech giants, while the S&P 500 made it a triple-play and pushed up to its highest level since the global recession.  The source of all the good news is strong data from across the board in the US, from financial institutions to jobs, housing to manufacturing, and important consumer and enterprise confidence showing increased spending, respectively, the US is certainly hitting rebound momentum (see this latest round up from FT).

What does this have to do with chip numbers?  As we know far too well, the fate of the financial markets directly impacts the semiconductor and electronics industry.  While we still all await the final settling of the European financial problems, it seems that the debt deal for Greece is abating present worries, and the likelihood for stability in the EU, to couple the US' growth momentum, is more likely.  Meanwhile, Asian markets continue to grow, but critical leaders such as China and India seem to be tempering to a more sustainable pace, although that means a good-bye to at or near double-digit growth days, at least for now (see this on China and this on India from FT).  While a slowing momentum may not seem to be positive news, there is just cause to view the tempering pace as a more sustainable, long-term pace and a next-phase maturation of the emerging economies which translates into steady and significant global demand for electronics, such as smartphone and tablet PC growth.

The growth of the semiconductor and electronics industry, is necessarily a global industry, relying on the different cycles (in both timing peaks and maturation stages) across economies.  Further evidence of the positive news that these economic data bring to our industry is this week's critical announcement by Gartner that they have raised their revenue forecasts for the global semiconductor industry from 2.2% to 4% (see this and this contextualized review of the Gartner news).  The foundation for this almost doubling in revenue estimates is based on increased stability in DRAM pricing (made especially noteworthy after Hynix CEO's comments as reported by WSJ), continued strong growth (roughly 18% according to the Gartner data) for NAND (from smart wireless device (SWD) demand) (see this NAND industry strength from ElectronicsFeed), and the expected increase in PC demand (notably from ultrabooks and worldwide demand increase).  There are, of course, other strong electronics growth sectors, particularly as enterprises continue to face the mounting data explosion and cloud computing demands, which has pushed pricing up amid limited demand for critical items such as enterprise drives.

Rounding out the reasons to feel more secure in these forecasts, are the solid data from SEMI and SIA recently as we explored last week in this MarketWatch Commentary article.  Adding to these numbers are SEMI's final 2011 data for global semiconductor equipment sales that were up 9% year-over-year to reach US $43.53 billion.  A break-down of SEMI's global equipment sales data reveal that:

"The global wafer processing equipment market segment increased 15 percent, the assembly and packaging segment decreased 14 percent, and total test equipment sales decreased 9 percent. Other front-end equipment sales grew by 5 percent."

Lisa Ann Cairns, Ph.D.
Written on Thursday, 15 March 2012 21:31 by Lisa Ann Cairns, Ph.D.

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