18pc Q2 vs. Q1 sequential growth… this improves 2009 to -14pc: Semicon update July. ’09

Here are the excerpts from the Global Semiconductor Monthly Report, July 2009, provided by Malcolm Penn, chairman, founder and CEO of Future Horizons. There are a lot of charts associated with this report. Those interested to know more about this report should contact Future Horizons.

Fig. E1: 12/12 Worldwide IC Monthly Growth Rates

Figure E1 shows the 12/12 worldwide monthly growth rates for IC sales in dollars, units and ASP for January 1997 to May 2009 inclusive. They need to be looked at in conjunction with the other 12/12 and rolling 12-month charts provided in the Market Summary section of this report.

Following hot on the heels of April’s 16 percent month-on-month sales growth, May grew a further 0.9 percent sequentially (0.4 percent for ICs), putting June on track to break through the US$20 billion barrier, for the first time since the chip market collapsed last September.

It would also set up Q2-09 to show 18 percent quarter on quarter growth, joining only three such precedents in the history of the industry when such a strong second-quarter growth spurt has occurred. The big question now is: “Is this the start of the chip market recovery or a blip on the statistics radar screen?” The short answer is both, the industry’s not out of the woods yet, but the chip market will recover faster than the economy. The stage is now set for a strong market rebound in 2010-11.

We are clearly in the midst of a serious industry recession but different from all previous historical precedents. As we have counselled before, going into this recession (the 12th in the industry’s 60-year history) the industry was in structurally good shape; that is something that has rarely happened before.

In addition, while the economy clearly drives the overall market for semiconductor devices, the correlation is poor meaning chips march to their own drum not just the economic pulse. Both of these factors mean that the chip market can (and will) recover much faster than the economy as a whole.

With the benefit of hindsight, the whole world clearly over-reacted to the 14 September 2008 Lehman Bros collapse, something again with hindsight the US officials probably now regret letting happen, and the massive destocking that followed masked the underlying residual demand. For sure markets too were down but they only declined not evaporated completely. The impact on IC unit demand was a victim of this uncertainty.