Future Horizons has come up with a forecast of 22% growth for semiconductor sales in 2010. The company emphasises that this is a minimum figure which it expects to see increased as early as next month. Here is how the year will roll out:
'The first quarter in any year is typically seasonally slow, so sales growth will theoretically slow from Q4's 5 to 7% range. It often goes negative. As there is currently no Q1-10 chip company guidance (does anyone think beyond the current quarter these days?), a look at what is happening in the foundries gives some insight, given Q4-09's foundry sales are Q1-10's IC sales ... the three-month wafer fab and IC production cycle time.
The fact is Q4 foundry sales are holding up strongly, implying a more modest than normal seasonal first quarter decline. For example, TSMC is expecting Q4-09 to be up between 3.3 to 5.5%, which would indicate a flat to small positive Q1-10 growth for the industry as a whole. This is in stark contrast to their original Q4 guidance (published in the third quarter) that called for a 4.8 percent Q4 decline.
Other foundries are similar and, equally importantly, no chip firm is yet issuing warnings about the market falling of a cliff and/or hitting a brick wall, and there are no other indication of a first quarter collapse, for example order cancellations, reschedules and evaporating backlogs, all of which gives us (but not yet the industry) strong anecdotal confidence that the chip market is not crashing.
For the record, our 22% 2010 growth forecast called for a 2% Q1 quarterly decline, which was intended to be a somewhat of a middle of the road
position. It was certainly not chosen to be aggressive or optimistic. Paradoxically, it now seems an increasingly unduly pessimistic position, flying in the face of the foundries' Q4 performance.
Q2 is then typically a flat to small growth quarter; for our forecast we plumped for a relatively safe 0 percent number. Q3 is then seasonally strong (we went for a middle of the road +10.3 percent) followed by a Q4 seasonal slowdown (in our case +2 percent growth).
None of our 2010 quarterly growth numbers are thus optimistic or aggressive from a historical growth standpoint, if any thing they may transpire to be somewhat conservative. Yet it is this 'benign' quarterly growth pattern that leads to our 22% number.
It is hard to get this down to a 16 % growth level; the quarterly pattern needs to be -4, -2, +8 and +1%, meaning 2009's recovery would have already run out of steam. No one is reporting this, certainly not the foundries.
I know compound interest can be a 'killer app' but they're going some to make -2, 0, +10, +2 quarterly figures into 22% annually. [Maths was never my strong point] Is there a campaign by the mainstream media to talk the world economy up?