2013 gave us the rebound from 2012 and previous years' troubling numbers for sales and revenue in the semiconductor and electronics industry. During the years since the global economic recession, we experienced a bumpy road with quite a bit of hesitation and lack of confidence from enterprise and consumers alike. That sentiment held the industry in pause mode and slowed growth hopes, stalling momentum and slashing hardware budgets. Meanwhile, smart wireless device (SWD) boosted the industry numbers, favoring mature market, early adopters and higher-tiered smartphone and tablet devices.
2013 provided a release from the "wait-and-see" mentality, and we finally started to shake off layers of the unease as consumer electronics and some enterprise spending returned. But the question that remains is, will 2014 be a continuation of growth or will we fall back to conservative patterns as we've seen happen over the past 4 years?
Moving to "solid" footing
The latest news from SIA and SEMI are, thankfully, supporting "solid numbers" for the start of 2014, as EETimes commented yesterday. As discussed in the recent MarketWatch Quarterly, the current trends in component innovation and market diversification (regionally and by end-devices) are supporting positive growth for the industry. As SIA published in early February, the 2013 worldwide sales for semiconductors :
[…] worldwide semiconductor sales for 2013 reached $305.6 billion, the industry’s highest-ever annual total and an increase of 4.8 percent from the 2012 total of $291.6 billion. Global sales for the month of December 2013 reached $26.6 billion, marking the strongest December on record, while December sales in the Americas increased 17.3 percent year-over-year. Fourth quarter global sales of $79.9 billion were 7.7 percent higher than the total of $74.2 billion from the fourth quarter of 2012.
This week, SIA's January 2014 report upheld the previous data and forecasts posting strong sales data again:
[…]worldwide sales of semiconductors reached $26.28 billion for the month of January 2014, an increase of 8.8 percent from January 2013 when sales were $24.15 billion, marking the industry's highest-ever January sales total and the largest year-to-year increase in nearly three years. Global sales from January 2014 were 1.4 percent lower than the December 2013 total of $26.65 billion, reflecting normal seasonal trends.
Complimentary to these data are the recent SEMI book-to-build data for North American semiconductor equipment, which were reported near the end of February:
[…]North America-based manufacturers of semiconductor equipment posted $1.28 billion in orders worldwide in January 2014 (three-month average basis) and a book-to-bill ratio of 1.04, according to the January EMDS Book-to-Bill Report […].
"Both bookings and billings are at values higher than reported one year ago and are good indications of growth in the 2014 equipment market," said Denny McGuirk, president and CEO of SEMI. "Device makers are investing in 20nm technology and advanced device structures, while leading packaging houses focus their investments on flip chip, wafer-level, and 3-D packaging."
Looking at all of the data coming out, there is strong support for the continued forward movement of the semiconductor and electronics industry in positive growth for 2014. This position is based on the equipment book-to-bill data which looks forward to upcoming production support and investment, as well as the backwards-looking data for sales that is showing continued solid, global growth for the industry.
Diversification supports forecasts
At the core of the solid forecasts are well-grounded strategies for diversification based in the still hotly demanded SWD market along device and regional market lines. Continued growth will be found through the ability to leverage existing technologies (devices and components) that are maturing and can return higher investment yields and increase volume sales for mid- to lower-tier devices to expanding markets worldwide, especially reaching new consumers who want lower-priced smart devices. We certainly saw these strategies played out last week at the GSMA Mobile World Congress (MWC) 2014 where OEMs from Nokia to Blackberry and all those in between have put forth their bids for market growth through emerging, developing and lower-priced mature market consumers.
As the EETimes article noted also, the growth and expansion of the Internet of Things (IoT) and connectivity through smart devices to home, automotive, and life IoT ubiquitous computing is a real thrust that is capable of supporting 2014+ global growth for the industry. As EETimes reported:
The SIA report is not the only research pointing toward a robust year for the chip industry thanks to the growing interest in the IoT. In February, IHS predicted that the number of Internet-connected devices will top 6 billion during the next 12 months. Consumers are buying smartphones, tablets, televisions, and other devices that plug into the Internet (increasing chip sales), and they are abandoning traditional gadgets such as cellphones.