New Semiconductor Growth Cycle Underway.
For the semiconductor industry, a new growth cycle has started.
‘Semiconductor companies acknowledge that the industry appears to have embarked on its next growth cycle upon entering the second half of 2012,’ says US analyst company IHS, ‘both pure play foundries and IDMs are anticipating strong growth, driven by the encouraging demand in wireless.’
At IFS2012, Malcolm Penn, CEO of Future Horizons forecast that, for 2013 and 2014, there would be double digit market growth of 15.6% and 16% respectively, with the industry breaking the $400 billion mark in 2014.
Industry fundamentals are good: low inventory; tight capacity; ASPs trending up; demand solid.
A high profile example of why demand is solid, is the Olympic opening ceremony.
In the audience seating alone, over half a million individually colour programmable LEDs, were used to transform the audience into a giant TV on which images could be displayed.
More LEDs illuminated the winged cyclists and other performers. Electronics controlled every aspect of the ceremony.
Honeywell recently characterised sports stadia, new buildings and factories as simply very large IT projects.
Transport is controlled, and increasingly being controlled, by electronics. The power grid is being smartened by ICs. Aeroplanes, cars and medical systems are using more chips.
Tablet units are growing at 50%+ a year and smartphone units at 40%+.
LTE will drive infrastructure investment.
There’s no shortage of cash in the big companies to spend when the CEOs have the confidence to do so.
So the historic average annual unit semiconductor growth figure of 11% is solid while, if the industry continues to manage itself right, firm prices will deliver more revenue and profit.
We’re in the second half. Things are going to get better.