September 6, 2011 - Global chip sales were "essentially flat" in July from the prior month at $24.9B, according to the Semiconductor Industry Association (SIA). Growth has slowed in recent months due to "global economic uncertainty," a "stagnation" that continues to loom over everything. Still, the group’s president Brian Toohey expressed optimism for sales growth in 2H11 as chipmakers and OEMs ramp up their holiday-season build period. Japan’s recovery from the March earthquake/tsunami also better than expected, the SIA said.
Note that it’s already September, i.e. the end of 3Q11, and year-to-year numbers right now are still slipping — down to ~3.2% in July, slower than 1H11′s 3.7% growth vs. the same period a year ago, and well below the SIA’s WSTS-based 5.4% forecast for all of 2011 (to ~$314B). Seven months into the year, we’re only at $174Bish. Thus the SIA either has to get ready to downwardly revise its outlook, or stick by its guns and bet on a strong 4Q11 growth injection to fulfill that 5.4% prediction — meaning the industry really needs to floor it in the seasonal holiday ramp-up.
Once again, Wall Street watchers are seeing mixed messages in their tea leaves. In the bearish corner, Piper Jaffray’s Gus Richard thinks chip companies are "subdued" and "not seeing the seasonal builds" to be expected starting around now — but they’ve been expecting softness and a backloaded 3Q11 anyway. Look for "weak results" and "miss[ed] estimates" from companies that professed "normal seasonal guidance," he thinks. FBR’s Craig Berger cites his own wafer production start checks indicating "a slightly tepid outlook among major chip firms for 4Q11."
Also supporting a more mixed-bearish view is Semico, which last week said the current downturn will continue through 1Q12. And this week TSMC leader Morris Chang said customers’ waning confidence in the global economy will take a toll on the chip market, and the company is backing off its 20% projections for 2011, though it does expect some rebound in 4Q11.
But on the upside, some blame punishing memory ASP declines for the poor numbers, with other segments (notably MPU) actually doing ok. Nomura Equity’s Romit Shah points out that ex-memory, chip sales were actually up 4% Y/Y in July vs. June’s -7% decline, though unit shipments were down (-3%) too. Wells Fargo’s David Wong backs up the SIA’s optimism regarding 2H11, predicting "a seasonal lift in chip demand" that could rise to "high single-digit" growth by December, compared with what was a weak 2H10.