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09/02/2010
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The global market for semiconductors is set for two years of growth at more than 20% per annum, according to bullish forecasts from Malcolm Penn, founder and chief executive of market analysis group Future Horizons. And he believes the market could grow by more than 30% in a single year.
 "The fundamentals of the chip industry are fantastic. We are entering 2010 with the 'four horsemen of the apocalypse' aligned and headed in a positive direction. There's a recovering global economy; strong unit demand with no excess inventory; tight fab capacity and past under investment; and average selling prices (ASPs) are in the early stage of recovery," said Penn at the analyst group's annual forecast seminar held recently in London.
Penn suggested that the semis industry cannot put any significant production capacity in place in 2010 and probably will not even decide to until the third quarter, which would delay the impact to mid 2011. "This implies two years of very strong sales growth in prospect. It doesn't get much better than this."
He added that the prolonged lack of capital spending on manufacturing capacity would produce shortages. And, following a tough decade – during which ASPs declined on average by 2.8% per year from 2005 to 2009 – ASPs are now set to increase at a compound annual growth rate of 4%.
Penn reiterated his forecast that growth in semiconductor revenues this year will be 22% and was adamant that the market would not come in any lower than that, unless there was some sort of major global catastrophe similar to the economic downturn of 2008 and 2009.
"There's no downside and we could go through the 30% ceiling next year. Given the impending 2010-11 fab shortage, the upside for 2010 to 2012 is just enormous," he maintained.
Based on the current momentum, Penn sees semiconductor sales growing next year by around 28%, which will represent the peak of the cyclical boom. However, this could stretch into 2012 if chip makers are slow to add capacity. In 2012, sales could grow by 18%, based on a normal cyclical market correction starting in the second half of 2012. This, in turn, would produce a 3% market growth in 2013.
The next cycle is expected to commence in 2014, with annual growth at 12%.
Penn has long been one of the more bullish forecasters for the semis sector and he remains at that optimistic end of spectrum this time round, compared with some other market trackers and institutions. The Semiconductor Industry Association, for example, has recently suggested the market this year would see growth of just over 10%, making the market worth $242.1billion, followed by a more modest improvement of 8.4% in 2011.
Market analyst Gartner recently upgraded its forecast for 2010 chip sales growth to 13% to reach $255bn, roughly the same level as in 2008. In the third quarter of 2009, Gartner projected that chip revenue would be up 10.3% in 2010. Meanwhile, IC Insights is projecting a market worth $270.7bn for 2010, an increase of 15% on last year.
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Author
John Walko
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