August 2, 2011 – Global semiconductor sales slipped in June 2011, and were down even more for the quarter — a period that usually sees an upswing after the traditionally slow year-opening quarter.
It’s another confirmed sign that the industry is slowing down. Last week, perennial IC industry optimist IC Insights chopped its 2011 forecast to single-digits (to 5%, down from 10%), blaming macroeconomic headwinds from Japan’s March 11 disaster to EU/US debt crises and US natural disasters.
Credit Suisse’s John Pitzer said the "modestly below seasonal" June IC revenues were mainly dented by declining memory ASPs; best gainers in June were discretes (14%) and MCUs (7%), with DRAM (-24%) and DSPs (-14%) seeing the largest declines. By applications, top markets were auto (15%) and wireless (12%); no surprise worst was consumer (-23%). Ex-memory, IC sales and units were above seasonal norms, though IC unit shipments are below a historic trendline. If the next several months follow normal M/M seasonality, 3Q sales should be up nearly 4%, he said in a research note.
Despite the monthly (-1.5%) and quarterly (-2.0%) declines, the SIA is putting a brave face on the numbers, pointing out that quarterly sales (a three-month moving average, as is the monthly tally) were actually higher (3.7%) than a year ago’s record levels, and are on pace for mid-single-digit growth (5.4%). (The WSTS’ midyear forecast projects another 7.6% growth in 2012. Positive factors the SIA is focusing on: a corporate PC refresh cycle, smartphone demand, and overall increase in semiconductor content in all sectors (particularly auto), balancing slower consumer sales and a recovery of the Japan disaster.
Another green light for the semiconductor industry: new benchmarks for increased fuel economy standards and efforts to include more green and smart technology in vehicles, noted SIA president Brian Toohey. "While the implementation is years away, it is an indicator of the increasing demand for smart technology and the innovations enabled by semiconductor technology," he said in a statement.
What do industry watchers think of the SIA’s latest stats? Generally speaking, they can’t seem to agree on what the tea leaves say. JP Morgan’s Christopher Danely points to lower-than-expected unit growth as a sign that it may be bottoming out; Normura’s Romit Shah says inventory build is a problem, counting 83 DOI vs. a 10-year average of 73 DOI. Citi’s Glen Yeung says "virtually every chip company" is pointing to weakness in their own areas though with "little consistency" to underpin a larger decline; Patrick Wang from Evercore thinks chip estimates are too high and that EPS estimates don’t cut deep enough.
