February 21, 2014 --The fourth quarter 2013 semiconductor market declined 0.8% from the third quarter, according to World Semiconductor Trade Statistics (WSTS). Full year 2013 growth was 4.8%. Our most recent 2013 forecast at Semiconductor Intelligence was 6% in November 2013, based on expectations of positive growth in 4Q 2013. Who had the most accurate forecast for 2013 semiconductor growth? We compared publicly available forecasts for 2013 released in the few months prior to the January 2013 WSTS data release. The most accurate was IDC at 4.9%. Other close forecasts were WSTS and Gartner at 4.5% and Mike Cowan at 5.5%.
Key semiconductor companies reported 4Q 2013 revenue change versus 3Q 2013 ranging from +42% at Micron Technology (driven by revenues from the Elpida acquisition) to -18% at SK Hynix (due to a fab fire). Seven of the fourteen companies in the table below showed revenue growth in 4Q 2013 and seven had declines. Revenue guidance for 1Q 2014 indicates an overall decline in revenue from 4Q 2013. Of the twelve companies which provided guidance, nine expect declines in revenue ranging from -2% from Micron Technology (estimated based on bit growth and price guidance) to -16% from AMD. Toshiba’s semiconductor group, Infineon and Freescale all expect growth in 1Q 2014. The weighted average guidance for 1Q 2014 is a decline of about 5%.
What is the outlook for year 2014 semiconductor market growth? Forecasts in the last few months range from about 4% (WSTS and Mike Cowan) to 20% (Objective Analysis). Half of the forecasts are in the 7% to 9% range. Our latest forecast at Semiconductor Intelligence is 10%. This is down from our November forecast of 15% due to a negative 4Q 2013 and an expected 1Q 2014 decline of about 5%.
Our 10% growth forecast is largely driven by an expectation of accelerating World GDP growth. The International Monetary Fund IMF January outlook calls for World GDP growth of 3.7% in 2014, up from 3.0% in 2013. Acceleration is driven by developed economies, with the U.S. expected to accelerate to 2.8% in 2014 versus 1.9% in 2013. The Euro Area should recover from a 0.4% decline in 2013 to 1.0% growth in 2014. The strongest growth continues to be in emerging and developing economies, growing 5.1% in 2014, up from 4.7% in 2013. Although China is forecast to decelerate slightly from 7.7% to 7.5%, most other developing economies are projected to show accelerating GDP growth in 2014.
Semiconductor Intelligence’s model of the semiconductor market based on GDP for 2014 predicts 11% growth. We are reducing this to 10% based on a weak 1Q 2014. The upside growth in 2014 could be as high as 14%. 2015 GDP growth is forecast by the IMF at 3.9%, a slight acceleration from 2014. Based on this outlook, we expect double-digit growth for the semiconductor market to continue into 2015.