UPDATED: Record semiconductor sales in 2011, 2012 outlook

UPDATED February 8, 2012 — The Semiconductor Industry Association (SIA), representing US semiconductor manufacturing and design, shows 2011 worldwide semiconductor sales hit $299.5 billion, a 0.4% year-on-year (YOY) increase and new record. This comes despite natural disasters in major semiconductor hubs of Japan and Thailand, and an overall weak global economy, noted Brian Toohey, president, SIA.

Semico Research’s forecast for 2012 shows a 10.11% growth in semiconductors revenues over 2011. Semico believes that the bottom of the cycle is occurring now, in Q1 2012, with pent-up PC demand and other factors carrying 2012 growth starting in Q2.

Figure. Worldwide semiconductor industry revenues. SOURCE: SIA, WSTS.

Worldwide semiconductor sales in December amounted to $23.8 billion, a decrease of 5.5% from November and down 4.5% YOY, with units steadily lower coupled with a slight increase in ASP, says SIA. Excluding memory, however, semi revenues were down just 1% YOY, Barclays Capital noted.

Q4 sales of $71.5 billion represent a 7.7% decline from Q3, and a 5.3% decrease over the same period in 2010. All monthly sales numbers represent a 3-month moving average.

The Semico IPI report indicates that semiconductor sales will jump 6.3% in Q1 2012. "We continue to look for 1Q12 to mark the inflection (average guide from semi makers is -3% at midpoint), and supported by 5-8% average Q/Q CAGR for revenues in 2Q-4Q12 (6-10% ex-Memory), we model semi revenues at Flat to +4% in CY12," commented Barclays Capital. "SIA data, coupled with 1Q outlook from chipmakers, suggest…the inventory correction [is] largely resolved." Semiconductors are expected to outpace end markets in 2Q12.

"The health of the industry is a direct reflection of the pervasiveness of semiconductor innovations and their applications in almost every aspect of modern society," Toohey said. The semiconductor industry saw strong demand for optoelectronics, sensors and actuators, as well as microprocessors in 2011. The memory segment underperformed, Barclays Capital pointed out.

What to expect in 2012? Semico points to new memory technologies, MEMS oscillator emergence, and new growth in system on chips (SoC). In 2012, the semiconductor industry will "invest billions in capital expenditures and in R&D," SIA’s Toohey added. This will pay off early, and in the long term.

Also read: Semiconductor industry revenue targets $323.2B in 2012

Lamps and image sensors drove 2011 growth in the optoelectronic market to $23.1B, a 6.4% increase over 2010. Despite generally positive results and continuing development activities in the optoelectronics industry, the LED segment appeared to slow toward the end of 2011, according to Strategy Analytics GaAs and Compound Semiconductor Technologies Service (GaAs), http://www.strategyanalytics.com/. "Mid- to long-term prospects for the LED market remain positive, but continuing economic turmoil and rapidly dropping prices have manufacturers in the LED supply chain on edge," said Eric Higham, Director of the Strategy Analytics GaAs and Compound Semiconductor Technologies Service.

"The optoelectronics market appears poised for growth. Optical device and network manufacturers are targeting 40 and 100Gbps systems, a number of new LED products have been introduced and the US Department of Energy continues to make large investments in solar energy," Asif Anwar, Director, Strategy Analytics Strategic Technologies Practice added. Optoelectronic applications bring energy efficiency and low cost in a wide range of products including mobile devices and cameras.

Sensors and actuators, currently the smallest semiconductor market segment, showed the highest YOY growth at 15.5% to $8.0B in 2011, as the technologies are adopted for consumer electronics, medical devices and automotive systems. Sensors include the growing micro electro mechanical systems (MEMS) devices, increasingly used in smartphones, tablets, digital cameras, and other consumer electronic products.

MOS Microprocessors, part of the integrated circuit category, which are predominantly used in PCs and other devices that need processing capabilities, experienced 7.5% in revenue to $65.2B YOY, making it the second largest semiconductor market segment for 2011, behind logic. Strong demand in the enterprise computing segment drove microprocessor sales.

In 2012, the industry is expected to experience further recovery due to increased demand across a broad range of end market segments combined with the delayed sales impact from the supply chain disruptions in H2 2011. Additionally, several large semiconductor companies announced plans for new facilities and new R&D projects that will serve to fuel the industry’s long-term growth expectations (see Samsung, Intel reports).

The Semiconductor Industry Association represents US leadership in semiconductor manufacturing and design. Learn more at http://www.sia-online.org/.

Semico released its expanded version of the IPI report, which now contains end market forecasts from Semico’s MAP Model database, along with semiconductor bill of materials, semiconductor total available market in dollars and units, and wafer demand reports. The IPI Report will continue to publish Semico’s semiconductor forecast every quarter while the other two months in each quarter will be bolstered with articles from Semico’s analysts providing additional topical research enhancing the information provided in the IPI report. Semico is a semiconductor marketing & consulting research company, and can be reached at www.semico.com.

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