The year has continued to bring strong growth numbers and records for 2014. Yesterday, the Semiconductor Industry Association (SIA) announced the 2014 global semiconductor industry sales numbers and the results show that the final data outperformed analysts' expectations. SIA announced posted sales worldwide totaled US $335.8 billion for 2014, representing a 9.9% year-over-year increase. On a month-over-month basis for December 2014, the growth was even stronger coming in at US $29.1 billion, making it the best December on record. Similarly, and unsurprisingly, the December strength pulled the fourth quarter (4Q14) sales up to a 9.3% increase on a year-over-year basis to US $79.9 billion. Those are significant increases any way you slice it.
Can we sustain growth?
Of course one of the first questions is where did the greatest amount of growth come from and was it relatively isolated. Widespread versus regional growth sets the tone for the next logical question, what are the chances for seeing similar (or better) growth this year and where (by region, market, or by commodity)?
According to the World Semiconductor Trade Statistics (WSTS), which provides data to support SIA's reports, the record sales data "topping $335 billion for the first time [was] thanks to broad and sustained growth across nearly all regions and product categories." That is a strong indicator that there is broad based support for continued growth because the momentum is not isolated and therefore not as susceptible to pull-backs. Having both regional and product sector growth means that there is a renewed demand across the board for semiconductors, giving significant support to the positive forecasts we have seen for 2015.
With many individual companies reporting record sales in 2014, including Smith & Associates' record $747 million in annual revenue, the momentum and positive growth positions are strong. The market opportunities from the Internet of Things/Internet of Everything as well as deepening penetration of semi into other industries presents a strong foundation for 2015.
Who's the strongest?
Of course there are stronger segments, both for components and regions. SIA reported the following regarding components (product categories):
Logic was the largest semiconductor category by sales, reaching $91.6 billion in 2014, a 6.6 percent increase compared to 2013. Memory ($79.2 billion) and micro-ICs ($62.1 billion) – a category that includes microprocessors – rounded out the top three segments in terms of sales revenue. Memory was the fastest growing segment, increasing 18.2 percent in 2014. Within memory, DRAM performed particularly well, increasing by 34.7 percent year-over-year. Other fast-growing product segments included power transistors, which reached $11.9 billion in sales for a 16.1 percent annual increase, discretes ($20.2 billion/10.8 percent increase), and analog ($44.4 billion/10.6 percent increase).
In terms of regions, SIA reported that for the first time in four years, all four major regions in their data experienced sales increases. As one might expect given the economic rebound still occurring in the US, the highest sales increases were seen in the Americas:
The Americas market showed particular strength, with sales increasing by 12.7 percent in 2014. Sales were also up in Asia Pacific (11.4 percent), Europe (7.4 percent), and Japan (0.1 percent), marking the first time annual sales in Japan increased since 2010.
"The U.S. market demonstrated particular strength in 2014, posting double-digit growth to lead all regions," continued [John Neuffer, president and CEO, Semiconductor Industry Association]. "With the new Congress now underway, we urge policymakers to help foster continued growth by enacting policies that promote U.S. innovation and global competitiveness."
These data from the SIA and WSTS are really remarkable and coupled with key individual companies along the global supply chain reporting similar, record growth numbers, there is good reason to have strong confidence that we are in the midst of a very positive upturn for our industry. The amount of diversification and the increased adoption of electronic devices for a widening range of purposes in consumer, enterprise, industrial, and municipal uses really gives us great hope for another strong year in 2015.