All IoT forecasts are baloney

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The semiconductor industry will grow by 11% this year, Malcolm Penn, CEO of Future Horizons, told IFS 2017 in London this week.

Unit demand growth is, however, trending below the 30 year average of 10%, said Penn.

In 2013, the unit growth was 9.5%, in 2014 it was 8.3%, in 2015 it was 5.1%, and in 2016 it was 6%.

“All the IoT forecasts are complete baloney,” said Penn. The reality is that demand is slipping and so are investment and capacity.

Capex and capacity are finely tuned to the low level of demand, inventory is low and a shortage is waiting to happen. The industry will take a minimum of one year to respond to an uptick in demand.

Capex is running at 10% of sales – half the pre-dot.com level. Capacity is only added as needed in the new fab-tight era. Even the wafer suppliers are struggling to meet demand. Mobile phone manufacturers are experiencing component shortages.

Double ordering, allocation and ASP rises loom.

Thee strong H2 last year suggests that 2017 will be much better than 2015 and 2016 and Future Horizons is predicting 11% growth for this year with a minus 2.5% Q1, a +1% Q2, a +7% Q3 and a minus 1.5% Q4.

The forecast to the upside is plus 16%, to the downside it’s plus 8%.


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