As we move past the excitement from CES and other industry trade shows that tend to dominate the news in January, we begin to wonder a bit more seriously about how the first half of the year, at least, may shake out. 2012 certainly did not provide a good engine to pin our confidence on a return to growth. With that, 2013 is the next hope, obviously; so is our hope well placed at this point?
Macro conditions sober but not glum
While we are, of course, focused on the semiconductor and electronics industry, to understand and gauge the forecasts for end-devices and components, we do need to understand the wider, macro-economic situation that dictates the spending tendencies of both enterprise and consumer buyers.
The general 2013 consensus remains positive, but, in all honesty, nothing to rave about. Thankfully, the global economy is still on a positive trajectory, and the hope is that will only continue to gain momentum, and eventually return us to more than tepid positive territories when we look at revenue and volume for the industry. Presently, the forecasts from credible institutions such as the International Monetary Fund (IMF) are projecting 2013 world economic growth at a slightly improved pace over last year, roughly at 3.5%. Notably, this is a downwardly revised by 0.1% from October 2012.
The reason all of this is of importance is that there is some back-and-forth in the wider mainstream and industry news as to where we might be headed more generally and within the industry. In short, the view should be understood as tempered optimism for growth through the first half of 2013 (1H13) followed by the expectation of more momentum during 2H13 and forward. At the more conservative end, the forecast is simply for world growth to hold somewhere around 2.6%.
Semi's situation better
Forecasted growth in the semi industry is much more positive than world economic growth, thankfully. The most recent issue of Manufacturing Market Insider (MMI), http://mfgmkt.com/ presents a well-rounded synthesis of the various industry analysts. Summarizing Gartner, World Semiconductor Trade Statistics (WSTS), IDC, IC Insights, and the Japan Electronics and Information Technology Industries Association (JEITA), MMI offers the following:
With the JEITA outlook and three out of five semiconductor forecast calling for growth rates ranging from 4.5% to 5%, one can make a case for a prediction of around 5% for the growth of end markets in 2013. Add about 1.5 percentage points for the effect of outsourcing, and the result is a growth projection for contract manufacturing (EMS + ODM) in the neighborhood of 6.5%. Naturally, if equipment production falls short of the JEITA forecast, then all bets are off.
A positive indicator for this year supporting the semiconductor growth forecasts is a resounding expectation that the much awaited enterprise IT software/hardware refresh cycle may actually, finally, happen in 2013. The reasons stem from a renewed level of confidence in growth.
This positive outlook for semi may not yield a uniform upside for everyone, everywhere. On Friday, we'll look at some of the more regional- and national-level factors that are expected to have an impact in 2013.