Surprise, Surprise, Semis Are Strong

The SIA says January’s sales of $25.5 billion were up 1.5% on December’s $25.2 billion which is pretty sensational news when the Dec-Jan market change has been an average minus 17% for the last ten years.

The USA’s leading semiconductor analyst, Bill McClean, CEO of IC Insights, points up the month-on-month contrast between Jan 2011 and previous Januaries:

In Jan 2010, the market shrank 7%; in Jan 2009 it shrank 17%; in Jan 2008 it shrank 16%; in Jan 2007 it shrank 18%; in Jan 2005 it shrank11%; in Jan 2004 it shrank 21%; in Jan 2003 it shrank 22%; in Jan 2002 it shrank 21%; in Jan 2001 it shrank 48%; and in Jan 2000 it shrank 17%.

Yet here we are with the glorious January of 2011 when the market grew 1.5% on December, according to the SIA.

The SIA didn’t revise its single digit growth forecast for 2011 as a result of the January figures, but McClean says: “Look for other forecasters to be announcing upward revisions to their 2011 low single-digit IC and semiconductor market forecasts over the next few weeks.”

In Europe the ESIA reports that the January 2011 sales figure was up on December 2010 by 1.6% measured in Euros and by 0.3% measured in $s.

“January sales figures confirm what we’ve been saying all along that this is going to be a strong year,” says Europe’s leading semiconductor analyst Malcolm Penn, CEO of Future Horizons, “the real message is that everyone thinks the first half will be weak – and they are absolutely wrong. They’re all going to be caught with their pants down because they haven’t done the right things now.”

Both Penn and McClean see two strong years ahead for the semiconductor industry.

IC Insights expects the semiconductor market to grow ten per cent this year and does not expect any downturn until 2013. Future Horizons expects 9% growth but adds, it could be more.

“2013 is the next downturn,” says McClean, explaining: “capex is still only 16/17% of sales and we expect it to stay in that range for some time.”

That’s because of the time-lag from ordering equipment to getting wafers out, explains Penn, from spending a capex dollar it takes at least a year to get a return in the shape of output..

“Last year we doubled the capex and only had 6% more wafer starts,” says McClean.

So we haven’t yet seen the effect of last year’s sharp increase in fab manufacturing equipment buying.