SIA released their most recent data on June global semi sales showing overall general stability with a month-over-month, three month moving average (3MMA) slight decrease of -0.1%, US $24.38 billion; May's global semi sales reached US $24.40 billion. On a year-over-year basis, June 2012 experienced the lowest decline in sales, at -2% or US $24.89 billion.The decline in sales, irrespective of the time basis for comparison, is isolated to the Americas and Europe, where sales are down as a result of macro-economic turbulence. The stability seen in the global sales numbers are based on the Asia Pacific and Japan rises. As SIA notes, " Japan and Asia Pacific attained month-over-month and year-over-year growth simultaneously for the first time since September 2010."
Positive 2H12 forecast
While ASPs are experiencing downward trends, demand cycles shortening, and the global economic situation remains volatile, particularly for the Americas and Europe, the forecast for semi remains positive for 2H12. As IHS iSuppli noted, regarding the electronic component market, "After declining by 3.3 percent in the first quarter and rising by 5.4 percent in the second quarter, global semiconductor revenue is expected to increase by 8.7 percent sequentially in the third quarter, before settling down to 1.0 percent growth in the fourth quarter."
Whether the market will be able to live up to this forecast is certainly at the fore of everyone's strategic sourcing plans. But with the expectation of rises in component pricing, as most recently voiced by IHS iSuppli, coupled with the traditionally higher third quarter and holiday season demand upticks, the likelihood of finishing 2012 as analysts forecast is quite good.
IC supply chain shifting
A different, but related trend that has been gaining momentum is the move back to in-house IC manufacturing, at least in some (small) part (see this from David Manners' blog recently). As Manners clearly states, "The semiconductor industry appears to be edging back to its roots - making its own manufacturing equipment and fabbing its own chips." If we consider the trajectory and significant slow in M&A activity, couple that with the fab and manufacturing supply chain's shift to an oligopoly, this in-house trend makes sense: risk and margin management through greater control over utilization, timing, pricing and inventory.
Coupling the macro-economic volatility with the dominance of only a few top OEMs in booking preference, the shift to regain in-house control could prove an interesting variable in the increasing competitive landscape.