Healthy Semiconductor Growth in 2014 and 2015

The first quarter 2014 semiconductor market was $78.5 billion, down 1.8% from fourth quarter 2013 and up 11.4% from a year ago, according to World Semiconductor Trade Statistics (WSTS). The year-to-year growth was the highest since 4Q 2010. The year-to-year growth has been accelerating for the last four quarters. Our February forecast at Semiconductor Intelligence was for 10% semiconductor market growth in 2014. This forecast is dependent on healthy quarter-to-quarter growth of 5% or higher in 2Q 2014 and 3Q 2014. The table below shows 1Q 2014 (or nearest fiscal quarter) revenue growth for major semiconductor companies and their guidance for 2Q 2014.

Most companies (9 of 15) reported revenue declines in 1Q 2014 versus 4Q 2013. Of the companies providing guidance, 11 of 12 expect revenue increases in 2Q 2014. Micron expects a decline in 2Q 2014 due to both declining memory prices and declining bit shipments. For the other companies the expected revenue increases range from 0.7% to 12%. The weighted average revenue growth for the above companies in 2Q 2014 is about 3%. Several companies provided a range of guidance, with the midpoints shown in the table above. The high end growth guidance ranges from 6% for Intel, Broadcom and AMD; 7% for Qualcomm; 8% for Infineon and NXP; and 14% for Texas Instruments. The higher guidance points toward a potentially strong 2Q 2014.

A robust 2Q 2014 could help drive year 2014 semiconductor market growth into double digits. Will this momentum carry into 2015? Below are forecasts for 2014 and 2015.

The forecasts for 2014 range from 4.1% from WSTS to 11.9% from Mike Cowan. We at semiconductor Intelligence are keeping with our February forecast of 10%. The trends for 2015 follow three distinct patterns. WSTS, Gartner and Semiconductor Intelligence expect 2015 growth to be similar to 2014. Future Horizons projects a strong acceleration from 8% in 2014 to 18% in 2015. Mike Cowan expects growth to decelerate from 11.9% in 2014 to 4.7% in 2015.

Semiconductor Intelligence’s forecasts for 2014 and 2015 are based on an improving economic outlook and continued growth of key end equipment drivers. The table below shows recent projections for global GDP growth from the International Monetary Fund (IMF) and growth rates for PCs, tablets, mobile phones and smartphones from Gartner and IDC. The IMF expects accelerating GDP growth in 2014 and 2005. Gartner projects PC units will continue to decline, but tablets should continue healthy growth. The combination of PCs and tablets are expected to show double digit growth in 2014 and 2015. Although overall mobile phone units are forecast to continue low single digit growth, smartphones will continue to be a major driver for semiconductors.

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