October 31, 2006 – A significant decline in microprocessor sales and a shift in demand drivers in Asia are the underlying factors in the World Semiconductor Trade Statistics (WSTS) new and reduced forecast for global semiconductor sales.
In its spring up date in May, the WSTS had projected double-digit sales growth for semiconductors in all of the next three years: 10.1% in 2006, 11.0% in 2007, and 12.8% in 2008. Now, however, the WSTS has lowered its outlook for chip sales in both 2006 and 2007 to about 8.5%-8.6%, with a slight downgrade in its 2008 forecast as well (to 12.1%).
Most product segments remain pretty close to initial forecasts, but the main reason for the diminished outlook is a perceived slowdown in sales of microprocessors. Back in May, the WSTS forecast microprocessor sales to grow 6.5% this year to $58.26 billion — but now the group sees sales in this segment actually shrinking 0.8% to $54.24 billion. In 2007, the WSTS sees 8.0% growth for microprocessor sales, vs. earlier expectations of 10.6%.
The WSTS also forecasts lower sales of logic devices in 2006 (3.9% to $59.94 billion, vs. 7.6% growth in its May forecast) as well as 2007 (8.8% growth to $65.24 billion, vs. 10.4% growth in its May forecast). The outlook for memory sales is mixed, with the WSTS improving its expectations for this year (to 17.3%/$56.93 billion, from 14.0%) but cutting its memory sales forecast for 2007 (to 8.9%/$62.01 billion, from 13.8%) as well as 2008 (to 9.4%/$67.83 billion, from 12.7%).
The outlook for other chip device areas is mixed — higher growth in 2006 for discretes, optoelectronics, and sensors, with continued better growth through 2008 for discretes and sensors, but slightly less than expected for the opto segment.
The WSTS says it sees continued growth in demand for electronics products such as PCs, digital consumer appliances and mobile communications, all of which are also witnessing increased semiconductor content per system. “These trends are expected to unfold in a challenging, yet generally healthy world economy,” said the WSTS, in a statement.
Regional breakdowns of semiconductor sales also illustrate the WSTS’ reduced optimism for industry growth. Every region is now seen with less growth in 2006 than was projected in May, with similar reductions spanning the Americas (11.5% to $45.40 billion, down from 14.0%), Europe (0.9% to $39.62 billion, down from 3.0%), and Asia-Pacific (10.9% to $114.71 billion, down from 12.4%). Chip sales growth for 2007 has been reduced similarly across every region. The WSTS kept its 2008 forecasts by region mostly unchanged — except it reduced the Asia-Pacific region, from 15% to 13.6% growth.
One noteworthy factor in regional semiconductor sales is occurring in Asia-Pacific, which has been the biggest growth region largely due to the shift in manufacturing to the area. But now, the region’s growth is being driven more by domestic demand, the WSTS points out.
WSTS semiconductor industry forecast, Autumn 2006
(Amounts in US $B)
…………………………2005……….2006……….2007……….2008
Americas
(spring)……………40,736…..46,451…..51,004…..56,497
(growth %)……………4.3……….14.0…..9.8……….10.8
(today)……………40,736…..45,405…..48,788…..53,997
(growth %)……………4.3……….11.5…..7.4……….10.7
Europe
(spring)……………39,275…..40,471…..44,327…..49,022
(growth %)……………-0.4…..3.0……….9.5……….10.6
(today)……………39,275…..39,615…..42,325…..46,969
(growth %)……………-0.4…..0.9……….6.8……….11.0
Japan
(spring)……………44,082…..47,309…..51,551…..57,234
(growth %)……………-3.7…..7.3……….9.0……….11.0
(today)……………44,082…..47,037…..50,379…..55,785
(growth %)……………-3.7…..6.7……….7.1……….10.7
Asia-Pacific
(spring)……………103,391…..116,228…..131,119…..150,747
(growth %)……………16.5…..12.4…..12.8…..15.0
(today)……………103,391…..114,710…..126,392…..143,520
(growth %)……………16.5…..10.9…..10.2…..13.6
TOTAL WORLD
(spring)……………227,484…..250,459…..278,001…..313,500
(growth %)……………6.8……….10.1…..11.0…..12.8
(today)……………227,484…..246,768…..267,883…..300,271
(growth %)……………6.8……….8.5……….8.6……….12.1
Discretes
(spring)……………15,244…..15,942…..17,010…..18,669
(growth %)……………-3.3…..4.6……….6.7……….9.8
(today)……………15,244…..16,549…..17,449…..19,236
(growth %)……………-3.3…..8.6……….5.4……….10.2
Optoelectronics
(spring)……………14,902…..16,404…..18,267…..20,916
(growth %)……………8.6……….10.1…..11.4…..14.5
(today)……………14,902…..16,618…..18,441…..20,874
(growth %)……………8.6……….11.5…..11.0…..13.2
Sensors
(spring)……………4,541…..5,161…..5,957…..6,822
(growth %)……………-4.7…..13.7…..15.4…..14.5
(today)……………4,541…..5,411…..6,114…..7,140
(growth %)……………-4.7…..19.2…..13.0…..16.8
ICs
(spring)……………192,798…..212,952…..236,768…..267,093
(growth %)……………7.8……….10.5…..11.2…..12.8
(today)……………192,798…..208,190…..225,880…..253,021
(growth %)……………7.8……….8.0……….8.5……….12.0
– Analog
(spring)……………31,922…..37,332…..40,881…..46,468
(growth %)……………1.8……….16.9…..9.5……….13.7
(today)……………31,922…..37,075…..40,069…..45,473
(growth %)……………1.8……….16.1…..8.1……….13.5
– Micro
(spring)……………54,687…..58,264…..64,459…..71,454
(growth %)……………7.8……….6.5……….10.6…..10.9
(today)……………54,687…..54,241…..58,557…..65,418
(growth %)……………7.8……….-0.8…..8.0……….11.7
– Logic
(spring)……………57,670…..62,055…..68,481…..78,250
(growth %)……………16.4…..7.6……….10.4…..14.3
(today)……………57,670…..59,943…..65,243…..74,298
(growth %)……………16.4…..3.9……….8.8……….13.9
Memory
(spring)……………48,519…..55,301…..62,947…..70,921
(growth %)……………2.9……….14.0…..13.8…..12.7
(today)……………48,519…..56,931…..62,011…..67,832
(growth %)……………2.9……….17.3…..8.9……….9.4
TOTAL PRODUCTS
(spring)……………227,484…..250,459…..278,001…..313,500
(growth %)……………6.8……….10.1…..11.0…..12.8
(today)……………227,484…..246,768…..267,883…..300,271
(growth %)……………6.8……….8.5……….8.6……….12.1
Source: WSTS