U.S.-based market analyst IC Insights says an historical precedent indicates that the semiconductor market could grow by 10-to-15 per cent this year. Double-digit growth is at the optimistic end of the scale when it comes to most other analysts’ predictions.
IC Insights bases its forecast on a "slightly positive" market growth between Q4 2010 and Q1 2011. According to the company, manufacturers commonly assume the turn of the year figures will exhibit contraction.
However, Bill McClean, President of IC Insights, explained that for the period 1984 to 2011, while the average growth for the semiconductor sector between Q4 and Q1 of the new year was -1.2 per cent, more than half the time (15 out of 28 years) growth was actually positive (see table).
Moreover, McClean says this is a good reason to talk up the full year’s prospects.
"In 13 of the previous 14 years in which [turn of the year] worldwide IC market growth occurred, the full-year annual gain of the IC market was at least 11 per cent," he said in a statement.
Last year saw a dramatic change of fortune for the semiconductor manufacturing industry after the disaster of 2009. In 2010 the chip sector rebounded by nearly 32 per cent according to data from the U.S.-based Semiconductor Industry Association (SIA).
Figures from the organisation show 2010 silicon shipments reached a record US$298.3 billion ($280.1 billion), up from US$226.3 billion ($212.5 billion) in 2009.
Nonetheless, early forecasts for 2011 were more restrained. For example, late last year, leading analyst firm Gartner said growth this year would be limited to 4.6 per cent, the SIA itself opted for 6 per cent, while consultant IDC was slightly more optimistic, predicting an increase of 9 per cent.
The experts say this prediction of modest growth was down to the continuing drag of the recession.
"Enthusiasm is muted at best as the ghost of the recent economic downturn continues to haunt the industry," Dale Ford, a senior VP at analyst iSuppli said in a statement back in January.
But McClean believes, now the Q1 figures are in, that there’s reason to be bullish.
"With many IC companies guiding 3-to-5 per cent sequential growth in [the second quarter], it appears the IC market is beginning to build momentum as it enters the seasonally strong second half of the year," he noted.
"Currently IC Insights forecasts that the worldwide IC market will increase at least 10 per cent in 2011. In fact, if rising oil prices do not cause a significant slowdown in the worldwide economy, IC Insights believes that a worldwide IC market increase of 15 per cent or greater is a distinct possibility for this year."
(IC Insights provides more details on the Q1 2011 IC market results in its May update to The McClean Report, available for purchase from the company’s website.)
The major distributors are a bellwether for the semiconductor market as a whole. Premier Farnell (known as element14 in Australia), for example, while unable to respond to requests for comment by the time this story went to press, has recently published its results for Q4 of the financial year ending 30 January 2011.
While revenue was up 14 per cent compared to the same quarter last year, most revealingly, sequential quarter sales – going against the normal trend – also showed an increase.
"Sequentially sales grew 2.0 per cent over the prior quarter which is counter seasonal for our business," Harriet Green, Premier Farnell’s Group Chief Executive, said.
