October 31, 2011 — Global sales of semiconductors rose again slightly in September for the second consecutive month, providing "an optimistic" close to 3Q11 — though the industry still struggles to find some visibility heading into the all-important seasonal year-end holiday consumer purchasing cycle.
Worldwide sales of semiconductors totaled $25.8B in September (a 3-month moving average), up 2.7% from August, though down 1.7% from September 2010. The data spanning 3Q11 (June-July-August) showed 2.1% 3.5% improvement vs. 2Q11 (April-May-June) [Update 11/1: the SIA says it incorrectly compared vs. the wrong three-month period]. SIA president Brian Toohey called the September numbers "an optimistic close to the 3rd quarter," driven in particular by Japan’s continued recovery (13.7% 14.9% Q/Q growth in chip sales — Update 11/1, another SIA restatement) and strong demand for auto and mobile processing chips. He also offered sympathies to those struggling with floods in Thailand.
The Y/Y chip sales comparisons continue to come down. The WSTS’ year-end forecast (which the SIA officially "endorses" in lieu of its own calculations) is due at the end of this month, but the WSTS’ midyear forecast was 5.4%. Sales were 3.7% for 1H11 and 3.2% for YTD in July, and have been working their way to ~2% and below since then.
Analyst’s take
Looking deeper inside the 3Q11 numbers, Barclays’ CJ Muse notes that September was well below historical norms — the 10-year historical average is a 9% bump, but this time units were down -1% with ASPs up 3%. Shipments were well below seasonality (5.6% M/M vs. 14% over a 10-year average); that was offset by higher ASPs (+15% M/M). DRAM actually did well during the month (+15% sales vs. 6% avg, shipments +35% vs. 7%). Both DRAM and NAND are showing signs of improvement: sales are up 15% and 43% M/M respectively, and +22% Y/Y) vs. a -7% decline in August, he notes.
3Q11 is typically a back-loaded quarter as chipmakers ramp-up device output for gadgets that’ll be sold (hopefully) during the holiday selling season. Still, the chatter among companies discussing their just-released 3Q11 results is for 4Q projections "down in the 7-10% Q/Q range," Muse says in a report, which would lead to ~1%-2% growth in 2011.
Muse still officially has a 4% forecast for 2011 but acknowledges the SIA’s data points to 1%-2%. Focus now, he says, has to be on inventory correction, and how that will impact growth in 2012 — he’s projecting 2%-5% growth, on the assumption of 7%-8% CAGR pulled down by some "modest" inventory correction. "We believe this correction will last into 4Q11 with 1Q12 potentially the trough," he says.