Semiconductors Down 2.7% in '12, May Grow 7.5% in '13

February 6, 2013 -- The world semiconductor market in 2012 was $292 billion – down 2.7% from $300 billion in 2011, according to WSTS. The 2012 decline followed a slight gain of 0.4% in 2011. Fourth quarter 2012 was down 0.3% from third quarter. The first quarter of the 2013 will likely show a decline from 4Q 2012 based on typical seasonal patterns and the revenue guidance of key semiconductor companies.

Guidance 1q13

Intel, Texas Instruments (TI), STMicroelectronics (ST), and Broadcom all have similar guidance – with the low end ranging from declines of 9% to 11%, the midpoint a 6% or 7% decline, and the high end a decline of 2% to 4%. AMD’s guidance is slightly more negative, ranging from -12% to -6%. Qualcomm, Toshiba, Renesas Electronics and Infineon expect 1Q 2013 revenues to increase from 4Q 2012, ranging from Qualcomm’s midpoint of 1% to Toshiba’s 15% guidance for its Electronics Devices segment. The major memory companies did not give specific guidance. Samsung expects a seasonal decline. SK Hynix sees strong demand for mobile applications but weak demand for PC applications. We at Semiconductor Intelligence estimate a 2% increase for Micron Technology based on its projections of bit growth and price trends. We estimate the overall semiconductor market will decline 1% to 3% in 1Q 2013.

What is the outlook for the years 2013 and 2014? The latest economic forecast from the International Monetary Fund (IMF) calls for World real GDP growth to accelerate from 3.2% in 2012 to 3.5% in 2013 and 4.1% in 2014. U.S. GDP growth is expected to slow slightly from 2.2% growth in 2012 to 2.0% in 2013 before accelerating to 3.0% in 2014. The Euro Area will continue to work through its debt crisis in 2013 with a GDP decline of 0.2% in 2013 and then recover to 1.0% growth in 2014. Japan’s GDP declined 0.6% in 2011 due to the devastating earthquake and tsunami. Rebuilding boosted Japan’s GDP 2.0% in 2012, but growth is expected to moderate to 1.2% in 2013 and 0.7% in 2014. Asia will continue to be the major driver of World economic growth. China’s GDP is forecast to accelerate from 7.8% in 2012 to 8.2% in 2013 and 8.5% in 2014. The IMF groups South Korea, Taiwan, Singapore and Hong Kong in the category of Newly Industrialized Asia (NIA). NIA GDP growth should pick up from 1.8% in 2012 to 3.2% in 2013 and 3.9% in 2014.

GDP 2013

Semiconductor market growth is closely correlated to GDP growth. Our proprietary model at Semiconductor Intelligence uses the GDP growth rate and the change in GDP growth rate (acceleration or deceleration) to predict semiconductor market growth. Other major factors in determining semiconductor market growth are key electronic equipment drivers (such as media tablets and smartphones), inventory levels, fab utilization and semiconductor capital spending. Our prior forecast in November 2012 called for 9% semiconductor market growth in 2013 and 12% growth in 2014. Based on the slight decline in the market in 4Q 2012 and expected decline in 1Q 2013, we have revised the 2012 forecast to 7.5%. We are holding our 2014 forecast at 12%. The chart below compares our forecast with other recent forecasts for 2013 and (where available) 2014.

SC
forecast

At the low end of the 2013 forecasts are WSTS and Gartner at 4.5% and IDC at 4.9%. Mike Cowan’s January model adjusted to the final 2012 data yields a forecast of 6.1%. IHS iSuppli is the highest at 8.3%, slightly higher than our 7.5%. The available forecasts for 2014 are 5.2% from WSTS, 9.9% from Gartner and 12% from Semiconductor Intelligence. Gartner and Semiconductor Intelligence both show significant growth acceleration from 2013 to 2014 while WSTS has only slight acceleration.