The news this week from the industry has been rather amazing, SIA reported on Monday that global industry sales for semiconductors reached the highest quarter level on record, reaching "$87 billion during the third quarter of 2014, an increase of 5.7 percent over the previous quarter and a jump of 8 percent compared to the third quarter of 2013." Not only is this a significant quarter-over-quarter rise, but it also outperformed the WSTS forecasts.
So, is it the economy or?
There's enough data swirling around lately that you could really craft whatever view of whatever sector you might prefer – however discerning which data are really telling and valid is the trickiest part. Looking at the global economic data, one can quickly get dizzy and feel quite somber about what might be ahead of us in the market.
These SIA data are significant. Not only do they represent a global view supported by solid regional data, they are also normalized over a three month moving average (3MMA), which levels out anomalies. With other market and industry data supporting continued positive growth (at sustainable levels, so not outliers or blips due to sudden hot demand for particular devices), and the widening of once niche markets like automotive and medical/health & fitness, there are solid bases for positive views for the semiconductor and electronics industry 2014+ growth.
The economy, however, does matter, and in Europe and Asia (particularly the question of China's slowing to a 7% range GDP pace) these question marks do cast a shadow over some of the excitement. Importantly, Asia, despite the questions around China's economy, was second to North America in month-over-month sales increases, coming in at 2.5% to North America's 2.8%. These numbers underscore that despite currency and overall GDP questions, the growth and demand for semiconductor and electronic components is strong and holding as penetration levels in numerous markets deepens.
Electronica Munich beat
Next week electronica will open, and as electronic design rightly discussed today, France and Italy's volatility and slips into recessions are detrimental to the EU forecasts given the size of their economies. We're not in 2012, and the outlook is brighter, as electronic design also rightly states, "the question we asked in this magazine at that time, “Can The Chip Makers Beat The Euro Zone Blues?,” has been answered with a resounding yes."
Smith's EU based team along with members of our North American team are headed to Munich for electronica 2014 next week. Over the next ten days we will be reporting live from electronica and providing first-hand updates from the trade floor and from our Amsterdam trading floor! If you are attending electronica next week, stop by the Smith booth at Hall A4, Booth 412 - we'd love to speak with you and hear your thoughts!
For more on the market and global industry positions, please see the detailed discussions in the recent Smith MarketWatch Quarterly, now available publically.