Good quarters and bad halves
In a good growth year for the semiconductor industry, Q2 has the highest sequential quarterly growth rate, says IC Insights in a 30 year review of cyclical trends. In a bad growth year, H1 takes the brunt of the slowdown.
When averaging the quarterly IC market growth rate figures over the past 30 years, the third quarter average increase was the highest at almost 6%. In contrast, the average sequential growth rate during the first quarter of the past 30 years was -1.4%.
Taking 10% annual growth as the breakpoint for defining a good or a bad year, in the 14 good growth years (i.e., 1983-1984, 1986-1988, 1992-1995, 1999-2000, 2003-2004, and 2010) Q2 typically registers the highest sequential quarterly growth rate.
This is somewhat of a surprise as the third quarter typically comes to mind first when thinking about the strongest seasonal quarter.
In the 16 poor IC market growth years (i.e., 1985, 1989-1991, 1996-1998, 2001-2002, 2005-2009, and 2011-2012), the first half of the year typically takes the brunt of the slowdown. H2 of the average poor growth year usually rebounds from the first half IC market downturn.
For 2012, the first quarter is the only quarter that is expected to display negative sequential growth and the 2H12/1H12 IC market is forecast to register a 10.5% increase, about equal to the past 20-year 2H/1H average growth rate.
The 3Q/2Q IC market growth trend line has been on an upward slope since 1983, indicating that the IC market is becoming increasingly dependent upon the seasonal growth in the third quarter of the year. With the slow shift of electronic systems sales from businesses to consumers over the past 30 years, it makes sense that IC market is becoming stronger in the second half of the year and the third quarter in particular.
It should be noted that the two biggest markets for ICs (i.e., PCs and cellphones) are both highly seasonal and now usually register noticeable second half of the year strength. Moreover, when one factors in the typically strong consumer IC sales ahead of the holiday shopping season, the total IC market is likely to continue its recent pattern of strengthening third quarter seasonality.
In contrast to the trend of increasing IC sales in the third quarter of the year, fourth quarter sequential IC sales growth has been on a downward slope since 1983. In fact, the trend line for fourth quarter sequential growth moved into negative territory beginning in 2007. However, the expectation for the introduction of new electronic system products (e.g., smartphones, tablet PCs, and Ultrabooks) beginning in late 3Q12 is forecast to help 4Q12 IC sales increase sequentially by 3% this year.