We're half-way through October now and there is a bit of sizzle in the air as retailers and consumers begin to turn their sights on the end of the year holidays, gift-giving, and hopes for the near- and long-term future. Not to be a Grinch, but while that's all well and good, what does that mean for the semiconductor and our outlook forecast?
Honestly, it has not been the year we had hoped for. Granted it was not an overall down year, but it has been as speedy as swimming through thick mud at times for all but those ever-hot market sector darlings, smartphones, eReaders, and tablet PCs. As we've discussed throughout the year in this space, many sectors and components have faced challenges and are still looking to resolve the question of where to next? This is particularly true for memory and for TVs, each faced with a different set of challenges resulting in a volatile market and looking for a new opportunity to renew not only stability but especially growth.
It's still the Economy…
On the wider front, the global, macro-economy has certainly been no friend to the situation and if there is blame anywhere, it is not as much in the production and inventory numbers, because certainly our industry has been called forth by many a financial analyst as a beacon for inventory management particularly in light of the challenges to deliver quickly but without excess holdings. The complexity of the EU situation coupled with the vacillations of the US economy has dampened the emerging markets in addition to the retail sector, writ large. With the US presidential elections roughly three weeks away, there is also a sense of anticipation and renewal simply by virtue of the election itself, regardless of which candidate is chosen.
But, importantly, it is not only the developed markets who have added consternation to the global economic situation, there are ongoing rumblings of concern for China and the sustainability of the current growth, the long-term sector engagements and manufacturing dominance (such as these questions from Seeking Alpha around what did China gain by dominating the renewable energy manufacturing sector other than debt held by national banks while prices plummeted globally and no one is really able to meet margins?). China, despite the jitters around the growth trajectory, is still a global economic leader and holds a significant population with a vibrant emerging middle class; as is still the case for the emerging markets. While growth globally has slowed, there is still growth and that promise has yet to be truly engaged. Read more about the emerging market outlook with a focus on China, in our latest MarketWatch Quarterly available to subscribers (free) as of last week, and publically available here in the next week.
On a positive note though, the most recent news is good news: job numbers in the US are anticipated to climb significantly with retailers beginning recruiting to fill holiday employment needs and expecting to retain a subset of those new workers as permanent employees. This is important news for semi because it takes having disposable income in order to spend it as a consumer, and it takes having new employees for an enterprise to really consider larger-scale hardware refresh cycles.
On our side of the coin, we have seen some important device releases from a variety of OEMs: smartphones, eReaders, gaming devices, tablet PCs (10/23 is the anticipated iPad Mini unveiling by Apple), as well as Intel's Ultrabook push through its channel partners. Price matters but so does new designs and features. Will the various events provide us with a perfect holiday storm to boost 2012's numbers? It really is quite possible given the macro-lens view and the likely positive fall-out for semi. Regardless, most analysts are pointing to 2013 as a reasonable turning point. We'll consider the various themes of 2012 and the upcoming industry offerings from manufacturing to devices for 2013 in our December issue of MarketWatch Quarterly.