Japan Quake Aftermath effect The Japan earthquake and tsunami that took place on 11 March, has resulted in an overstock of chips at IDM and Fabless. A large stock of chips was built as a result slow demand in the second quarter. Such an excess of chip stock will result in poor sales in the third quarter. For the last five years the third quarter has shown to be an average high season for chip demand. The high unemployment figures in the USA does not show signs of improvement as financial confidence remains low in the market. An oversupply of chips and an uncertain future demand and chip ASP pressure has not helped in the in 2H 11.
The Aftermath of Japan Quake has resulted in production of Non-Japanese supplies of Sensors, Detectors for automobiles and power management devices for note books. Large world players such as Vishay, NXP, Allegro, and Infineon have benefitted from Japans tragedy.
SIA Research
Integrated circuits still remain the most dominant segment of the semiconductor industry, and account for around 84% of the total revenue in 2009 followed by optoelectronics, discrete components and sensors. SIA research projects that future growth will be driven by sensors followed by optoelectronics, discrete and ICs semiconductors with a projected CAGR at around 17%, 15%, 11% and 8% respectively for the period 2011-2013.
Tablet Smartphone’s and tablets including iPadII, have continued to gain popularity, with increased sales from 5% to 25%, as result of the desktop computer is losing its market share from 42% to 28% by 2014.
Troop Pullout
According to statistics, the war in Afghanistan is costing American taxpayers some $10 billion a month. In addition to 100,000 US troops, more than 40,000 NATO soldiers are also stationed in Afghanistan. The wars in Afghanistan and Iraq have cost the US $1 trillion over the past decade. Obama has told the US that the plans for troop withdrawal from Afghanistan (promised 18 months ago) will begin next month.
Unemployment Rate
Obama has promised to create 5 million jobs, although the investment value of government stimulus is debatable. It is clear from the current unemployment figures that Obama's Keynesian policies have failed to create any significant number of jobs, let alone sustainable green jobs. In fact, the Obama Administration seems to be taken by surprise, too at the lack of progress made in this area.
US Presidential Election
2012 is Obama presidential election year, and Obama will be trying to pursue the throne again. He will not consider softening his approach to boosting the economy and has presented a strong campaign based on what he promised three years ago. The top political issue heading into the 2012 election and the Achilles heel of his presidency is to create million of jobs. He has announced a plan to train 10,000 new American engineers every year through a public-private partnership. And through other initiatives such as these he plans to create more jobs.
Smart Phone
Companies like Avago supports the mobile communication sensor business and has a strong order book for their Automobile and Phone Business sector. Both Nokia and RIM has badly affected by the Apple and HTC market share. It is unknown why the RIM stock price dropped 28% in a week ago! Symbian is a sunset mobile platform and Blackberry is also losing ground to iOS and Android. Sooner or later the largest company in the Smart Phone business sector may be over taken by Apple and followed by HTC to be the 2nd largest Smart phone company in the world.
Apple
Assuming Apple iPhone5 will be launched in September, this will prove “Must Have” standard for people to buy and/or replace the older iPhone4. The market will be stimulated, the second phase of higher Chip demand should commence in September.
The expansion plan for semiconductor nest purchase will commence in September to be delivered in an October/November time frame, and we should enjoy a strong demand of semiconductor equipment by September- December Q4 2011.
Summary
The demand for Automobile components will be slow by Q4 11, but this will be balanced by an increased demand for components for non-ipad tablet, IpadII, Smart phone and Iphone . We will see a slight growth of 5% for semiconductor between Q2 and Q3 compared to figures in Q1 Q2. After Q3 we will see some flattening of sales and a down turn of 4-7% by Q4. The next big demand for Chips will result in achieving double-digit substantial growth in Q1 2012, due projected job growth in the US and huge demand from China from the middle class for more mobile communication device, smart phone, electronics consumers products.
The Asian Political situation will remain more or less stable with exception of the situation in the South China Seas. Between China, Brunei, Malaysia, the Philippines, Taiwan and Vietnam, Chinese tensions has risen in the region in the past month with concern that China is becoming more assertive in its claim to territorial waters. It is estimated they are seeking to form a large U-shape area over most of the sea's 648,000 square miles (1.7 million square km), including the Spratly and Paracel archipelagos. Gates of US is supporting the maritime defence capability of the Philippines on 24 June. China Leader Wen Jia Bao told UK media yesterday that he will try to keep China’s inflation below 5% and maintain annual Growth target of 7% or even 8% for this year. If that is the case, this world’s fastest growing and at same time largest market will help to keep Semiconductor Chips and Equipment demand on a healthy growth. We will have to wait and see how this develops!
HK Snob 27 June 2011
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