A recent report from Future Horizons suggests an 18 percent growth for the chip market in Q2-2009! So, is this a sign of the chip market recovery or a mere blip on the statistics radar screen?
It is both, said, Malcolm Penn, chairman, founder and CEO of Future Horizons, and counselled that: "The fourth quarter market collapse was far too steep -- a severe over-reaction to last year's gross financial uncertainty -- culminating with the Lehman Brothers collapse in September. The first quarter saw this stabilise with the second quarter restocking, but there are other positive factors also in play."
Examining a bit further, here's what he further revealed. One, the memory market is seeing some signs of slow recovery. He said, "This has already started DDR3 driven!" Likewise, companies are also in the process of revising their forecasts. The reason, Penn contended, being, "The maths has changed dramatically since Jan 2009!"
According to him, factors now leading to conditions looking up in H2 2009, include the normal seasonal demand -- from a tight inventory base -- and tightening capacity. There is also a clear indication of the correction phase to rebalance over-depleted inventories having started. "This is what's driving Q2's high unit, and therefore, sales growth," he contended.
Firms advised to stop seeing and waiting!
This isn't all! Penn further counselled firms who are still in a wait-and-see mode to 'stop seeing and waiting'! Next, fabs are also looking to maximize their returns. For one, they have stopped over-investing.
Do we have enough stats from others to back up what's been happening in the global semiconductor industry? Perhaps, yes!
IC Insights stands out
First, look at IC Insights! It has stood out by pointing out in early July that H2-09 is likely to usher in strong seasonal strength for electronic system sales, a period of IC inventory replenishment, which began in 2Q09, and positive worldwide GDP growth.
IC Insights has predicted global IC market to grow +18 percent; IC foundry sales to grow +43 percent; and semiconductor capital spending to grow +28 percent in H2-09.
DDR3 driving memory recovery? Flat NAND?
Elsewhere, Converge Market Insights said that according to major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.
This is quite in line with Future Horizons contention that there is a DDR3 driven memory recovery, albeit slow. It would be interesting to see how Q3-09 plays out.
As for NAND, according to DRAMeXchange, the NAND market may continue to show the tug-of-war status in July due to dissimilar positive and negative market factors perceived and expected by both sides. As a result, NAND Flash contract prices are likely to somewhat soften or stay flat in the short term.
Semicon equipment market to decline 52 percent in 2009!
According to SEMI, it projects 2009 semiconductor equipment sales to reach $14.14 billion as per the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.
The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.
EDA cause for concern
The EDA industry still remains a cause for concern. The EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for Q1 2009 declined 10.7 percent to $1,192.1 million, compared to $1,334.2 million in Q1 2008, driven primarily by an accounting shift at one major EDA company. The four-quarter moving average declined 11.3 percent.
If you look at the last five quarters, the EDA industry has really been having it rough. Here are the numbers over the last five quarters, as per the Consortium:
* The EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
* The industry revenue for Q2 2008 declined 3.7 percent to $1,357.4 million compared to $1,408.8 million in Q2 2007.
* The industry revenue for Q3 2008 declined 10.9 percent to $1,258.6 million compared to $1,412.1 million in Q3 2007.
* The industry revenue for Q4 2008 declined 17.7 percent to $1,318.7 million, compared to $1,602.7 million in Q4 2007.
Therefore, at the end of the day, what do you have? For now, the early recovery signs are more of a blip on the stats radar screen and there's still some way to go and work to be done before the global semiconductor industry can clearly proclaim full recovery!
Before I close, a word about the Indian semiconductor industry. Perhaps, it needs to start moving a bit faster and quicker than it is doing presently. Borrowing a line from Malcolm Penn, the Indian semiconductor industry surely needs to "stop waiting and watching."
I will be in conversation next with iSuppli on the chip and electronics industry forecasts. Keep watching this space, friends.