July 6, 2010 – If the industry’s rapid recovery this year seems familiar, it’s because we saw it six years ago, says IDC, which projects a ~22% bounceback in 2010 — if demand holds up its end of the bargain.
Global semiconductor sales will spin up to $295B in 2010, about 22% growth vs. $225B in 2009, according to IDC in a new forecast report. The firm then sees a slowdown to about 7%-8% growth in 2011 ($295B), and then back up to double-digits in 2012 with ~16% growth to $344B, for a six-year (2009-2014) CAGR of 8.8%.
Looking at 2010, there is "strong secular growth" for a range of applications: smartphones, mobile PCs, media tablets, and automotive, notes Mali Venkatesan, research manager in semiconductors at IDC, who led the study. For 2010 he sees "strong double-digit" growth (>35%) for chips in PCs, due in part to mobile PC applications; record growth in wireless applications, thanks to smartphones; and >20% growth in several application segments (industrial, military/aero, automotive), due to alternative energy, LEDs, and increased semiconductor content in autos. Memory in particular will see good growth (DRAM + NAND: >52% to $66.7B). The consumer segment, however, will lag a bit, with just 5.8% growth, as sales of things like DTV and media tablets can’t offset "sharp declines" for other application markets such as PMP flash.
After a post-slump exuberance in 4Q09-1Q10, order rates are now "normalizing" as the industry realizes the underestimated level of restructuring that occurred and impact to the supply chain — which is why demand has outstripped supplies and inventory levels. "Moving forward demand will have to be the catalyst that sustains this current cycle," the firm says, and it expects "a seasonal solid period of demand" through the end of the year. Factoring in seasonality, orders, and a "bottoms-up model," this recovery is similar to what the industry saw in 2004, writes Venkatesan.
For 2011 and 2012, IDC sees strong growth in enterprise spending, and high single-digit growth returning for handsets (citing pricing pressures and stabilizing memory content). "We believe device applications such as smartphones, mobile PCs, media tablets, and automotive will show strong secular growth both in 2010 and 2011," Venkatesan writes. But for memory in general, look for a flat to slight decrease due to technology transitions, pricing pressure, and increased supplies coming online.
Venkatesan warns that the global economic recovery could be slowed by macroeconomic problems — e.g. the Euro crisis, high US unemployment and related low consumer sentiment, and fear of an "asset bubble" in BRIC countries (Brazil, Russia, India, China). "In such a scenario, the expected growth in the second half of 2010 may be pushed into early 2011," he says.