2012 left us with one positive note, at least: the fourth quarter came in above expectations, pulling the industry to a 2.8% increase for the year over 2011 growth levels, which was a full point above original estimates for 2012. Unfortunately for the semiconductor industry, 2012 only saw growth in the fourth quarter, which seriously affected many companies' revenue along the entire semi value chain, but, since then, trends have been improving.
The PC slide continues
While 4Q12 did not help overall 2012 revenue and growth move into more normal levels, it did mark the start of a positive trend that is holding, albeit quietly and albeit in the face of still tumbling PC sales. The negative news for 1Q13 has really been focused around the declining worldwide PC shipment data which was down -13.9% year-over-year, and fell by -7.7% more than forecasted for the same period, according to recent IDC reports. "The extent of the year-on-year contraction marked the worst quarter since IDC began tracking the PC market quarterly in 1994. The results also marked the fourth consecutive quarter of year-on-year shipment declines."
The forecasts for the PC sector do not, unfortunately, show much promise as consumers and enterprises continue to shift away from traditional PCs for personal and work use. The challenge will be for OEMs to make the right, strategic market decisions in terms of providing the features in the desired forms that are in demand. Presently, that demand is strongly focused around leveraging the cloud via portable devices such as tablets and smartphones. There is significant opportunity though because not all of the functionality of PCs is achievable for the majority of tablet users.
Semi picking up steam in 2013
Meanwhile, in early April, SIA announced worldwide semiconductor sales data. For February, year-over-year sales increased 1.4%, reaching US $23.25 billion for the month (all monthly sales data represent a three-month moving average to smooth trends.) Comparing regional year-over-year sales, Japan's data pulled the global results down due to a -15.7% decline for the same period, while Asia Pacific and the Americas both experienced growth of 6.7% and 1.6%, respectively, per SIA's data.
Although global semiconductor sales for February 2013 were 3.8% lower than the previous month, January, the fact that the data were higher than 2012 was noted as cause to be positive by SIA. According to Brian Toohey, president and CEO of SIA, "[d]espite persistent economic uncertainty, the global semiconductor industry is off to a promising start in 2013 – led by strength in memory sales – and is ahead of last year's pace."
Considering SEMI's most recent book-to-bill ratio for March 2013, presented as a three-month moving average, we see confirmation from semiconductor equipment supporting the positive, general semi industry trend forecasts from SIA and IDC. As SEMI reported last week regarding the book-to-bill ratio increase for North America-based manufacturers of semiconductor equipment:
The three-month average of worldwide bookings in March 2013 was [US] $1.14 billion. The bookings figure is 5.9 percent higher than the final February 2013 level of [US] $1.07 billion, and is 21.3 percent lower than the March 2012 order level of [US] $1.45 billion.
The three-month average of worldwide billings in March 2013 was [US] $1.00 billion. The billings figure is 2.8 percent higher than the final February 2013 level of [US] $974.7 million, and is 22.2 percent lower than the March 2012 billings level of [US] $1.29 billion.
Comparing at a quarter-over-quarter level, SEMI underscored that the market improvement shows forward momentum based particularly on the "continued investment in technology upgrades by the world's chip makers." The 23% quarter-over-quarter growth in bookings is truly a significant indicator of positive sentiment and supports the view that 2013 may indeed reach the rebound into the 5% annual growth levels for the semiconductor industry.