IC Market Forecast 2012

2012 brings yet another year to all of us, and once again the industry is bouncing back after a challenging 2011. We welcome a fresh optimistic outlook as perceived by semiconductor industry analysts at large, both domestically and abroad. The sovereign debt and economic worries of the European Union has brought a torrent of dreadful news, yet the industrial indicators within
technology and specifically the semiconductor segment reflect increasing stability and projected growth during year 2012. In Recent two months, seems that more Power Device is coming up, IGBT, Power Clips. Automobile will be stable over the year with some minor growth as comparing with 2011.
Moreover, IDM, Subcon tends to have a new demand for a better cost format on legacy or even QFN, obviously there is a new demand for equipment base on 100mmx300mm leadf rame format on Legacy SOIC, TSSOP and also QFN run in Q4 2012.
Wireless and mobile is everything, no matter, handphone, tablet, Ipad had demand on wire less devices, Iphone5 will follow Ipad3 in March Launch. Samsung has stuck a good balance In terns of performance, flexibility and versatility comparing to Ipad, Samsung will gain market share, and grow with Apple. Solid state Ram in replacing harddisk will create huge demand on equipment. I am speculating that Q2 2012 will have some ramp up for equipment demand. Worse case 2012 business will at par at 2011 or even 5%-7% better than 2011.
HK Snob

2011 Q4 IC market Forecast

Japan Quake
March 11 The Japanese earthquake raised concerns about supply of silicon wafers, batteries, crystal oscillators, substrates material and other specialized materials.
However, the supply shortage has had minimal impact on markets seen.
Performance of 2nd Quarter
2nd quarter the supply of semiconductors is only slightly below the norm; 3rd quarter is less certain.
Semiconductor related inventory levels are rising.
The Commodity price inflation has started to influence consumer behavior. China has had a 6.7% inflation rate and the high fliers have tried to cool down the real estate price throughout 100 cities in China by imposing regulation on purchases. It is hoped that such regulation would result in lowering the inflation rate. The other side of China promises an annual growth as much as 8% for 2011!
IC ASP
IC ASPs elevated in 2H 2010 due to limited supplies. However in 1H 11, ASPs should revert back toward normal long-term trends. The units will come under some pressure in 4Q11 to 2Q12 to get back to current elevated inventory levels.
IC Packaging
ASSP sales dropped by $2.2B and accounted for About 50% of the Downside (2Q11 versus 1Q11 Forecasts).
In 2011 DRAM sales are expected to drop by 7% compared to 2010. However, NAND Flash Rams are expected to rise by 30% and will resist trends from 2010.
Smart Phone and Tablet
PC Mobile Phone sales have dropped by 3B $ in 2Q11 comparing with 1Q11.
2011 production unit growth for 2Q11 will not reach its forecast of 10.2%, as it has decreased slightly to 9.5%. Mobile phone 2Q11 production unit growth increased slightly to 12.9% compared to its forecasted growth of 12.6% in 1Q11. The percentage growth for Smartphone’s keeps on increasing. Media tablet production forecasted to increase to 71.6M in 2011, with production exceeding 320M in 2015.
Automotive production is predicted to be lower, but will have little impact on total semiconductor growth as automotive accounts for 3.45% of total semiconductor business in terms of revenue.
Chip Price
Foundry overcapacity is expected to hit 4Q11 and most of 2012 which will ultimately lead to chip price drops.
The Fear of chip shortages has not translated to increase in ASPs at this point.
Apple as Market Driver
It is expected that Smart phones will gain market a greater market share by 2015 with 30% CAGR.
Apple product Prices have not dropped as fast as we expected, which will affect the type of products purchased.
The Percentage of tablets shipped with WiFi only is higher than expected compared to WiFi+3G.
There is a significant opportunity for application processors, baseband processors, RF and wireless connectivity.
The iPad2 and iPhone, iPad 2 introduction & the prices of its rivals leaves Apple ahead of competitors.
OS and hardware evolution will turn Media Tablets into a more viable PC alternative in most of the cases.
Apple Sales in 2Q11
Apple sold 3.76 million Macs during the 2nd quarter, a 28 percent unit increase compared to last year’s quarter. The Company sold 18.65 million iPhones in the quarter, representing 113% unit growth compared to last year’s quarter. Apple sold 9.02 million iPods during this quarter, representing a 17% unit decline from last year’s quarter. The Company also sold 4.69 million iPads during the quarter.
Apple Beneficiates
Iphone and Ipad component suppliers: TI, Skyworks, Broadcom, Analog Device, TriQuint, Intel, Qualcom, Samsung, will be having growth because of Apple products, by evolving designs based around the application processor. Remove cellular baseband, Transceiver, RF in WiFi-only products.
Smart Phone OS
Android – Outperforming the market, strong OEM and carrier support, expect aggressive pricing for penetration.(market share 14%).
Apple iOS- End to end control, superb usability and developer-friendly ecosystem. (market Share 80%)
RIM - End to end control gives security, growing ecosystem initiatives, major challenge from Android and iOS
Symbian – is losing share rapidly, and Nokia shifting to Windows base Phone.
Windows Phone – Nokia partnership a boost as WP7 vies to be a competitive consumer OS.
Nokia is losing business, typicall some of our Customers like Amkor and ST in affected!
US Consumers
In the 2H11 Consumer confidence level is low and purchases are slow.
The US economic growth is also poor, with short term weakness predicted. The mature PC market is also weak, and the upside index unclear. Consumer PC remains below expectations through 2011, with enterprise replacement growth expected to be healthy.
Smartphones and media tablets represent the majority of semiconductor revenue growth over the next three years. It is expected that entry-level smart phones will be the second wave of growth in the smartphone market.
Market share and strategy shifts amongst the smartphone and tablet ecosystems and vendors will have a significant impact on semiconductor suppliers.
Capitals spending
By 2011 spending is expected to be up by12% driven by Intel, foundry, and NAND spending
2012 will stall a little as production re-aligns with demand
Out-of-phase segment cycles create stop-start patterns in cap-ex profile.
Foundry Shipment, Capacity, UtilizationInvestment Race Leads To Oversupply since 1Q11 to 4Q11.
Positive sign of seeing foundry capital is up from 2011-2015
On said their Q3 and after business will slow down.
Conclusion
Our greatest risk remains in 3rd quarter.
ASPs are under pressure and Japan has not reversed the current trend and stock will remain elevated until supply chain feel more settled about Japan impact.
It is most-likely semiconductor growth for 2011 will be 5.1%, and 2012 forecasts reduced to 8.6%
The will be a brief respite in 2012, before DRAM and foundry overcapacity causes renewed weakness in 2013.
There will be a slight increase for capacity for Q111 compared with 4Q10. 2Q11 is almost on par or slightly below 1Q11.
The rumor that of iPhone5 will be launched in Sept, (news of UK APPLE is employing Temporary sales for iPhone5) means there should be a driver for the capacity to be maintained or increased due to the new demand iPhone5 staring in end July.
So 3Q11 should maintain as forecasted. However, due to the US economy, and high unemployment rate, I am not too optimistic for Q4 which will slash demand compared to 3Q11. LED market will keep nose diving till Q4 as I see no new driver for more equipment purchase, as the world largest LED drivers IC is On and National (now they became one) that would be some effect on our IC capacity.
SMT purchases seem to have softened demand in June and this is likely to continue into the future unless there is an outstanding demand for iPhone5.
CIS makers have to increase capacity due to demand for Iphone4, (iphone3 still making 1m unit a month by now) and Camera module for iPadII. They are optimistic for Apple product going forward.
In Short, Q3 will be slower than Q2. Q4 will be even worse unless there is an up-sign for market growth in the coming three months. Note that the Gold price keep on rising after hitting record $1800 an ounce. S ceiling debt 1.2 trillion Dollars in 10 year, Standard Poor rated US bank credit as AA+ instead of AAA. All this means that US will slow down their spending. They might stat printing money again fo paying debt. At the present time we do not see 2012 being a very good year. At best they will maintain similar growth to 2011, that is about US$338 at a growth rate of 7% as of 2011.
HK Snob

Semiconductor Equipment Business Forecast for 2H 2011

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

Japan Quake Aftermath

We Predicts Quake's Impact on Electronics Will Be Limited March 11 Japan earthquake and tsunami disasters will shave 1.5% from global GDP in 2011 and contribute to a slight softening in the semiconductor and electronics market. These short-term effects will be limited, however, and the market should quickly recover. The Japan disaster will help reduce worldwide GDP growth to approximately 3.4 % this year, compared with an earlier estimation of a 3.9% expansion. This will reduce the global economy by about $260 billion, assuming the Japanese economy declined by 5.2% in 2011. Taking the pessimistic situation of a 3.4% worldwide GDP growth rate in 2011 (as compared to our current forecast of 3.6% growth), and the associated $260 billion negative impact on worldwide GDP, and multiplying it by 2.2% yields an electronic systems sales loss of $5.7 billion. Subtracting $5.7 billion from current 2011 electronic system sales forecast of $1,348 billion would put electronic system sales at about $1,342 billion for this year, an 8.5% increase over 2010 compared to our current forecast of 9%. The forecasts may represent the best short-term outlook for the industry and the worldwide economy, assuming oil prices stay relatively stable at around $100 per barrel. We believe even a worst case scenario where the economy is more heavily affected would still not dramatically Ref. IC Insights HK Snob

Japan Quake Aftermath

March 11, 2011 14:49: Eastern Pacific coast earthquakes occurred

Epicenter : 373km (NE) of Tokyo, underground 24.4Km point

Magnitude : Earthquake close to 9 in the Richter scale occurred  (The largest earthquake ever in Japan, the fifth earthquake on Earth,

Summary of Damage Regions

East coast of Tohoku regions-Aomori, Iwate, Miyagi, Fukushima prefecture- and east coast of Kanto region -Ibaraki and Chiba prefecture were damaged directly (by earthquake and tsunami).

So far over 7,000 lives were lost, over 12000 person unfound, and 300,000 homeless

The loss of communication infrastructure (NTT Docomo, etc.), nuclear power plants, etc.  in the regions and all industrial manufacturing plants shutdown (temporary or provisional), disruptions occurred.

It appears that some infrastructures of the east coast of Tohoku region -Yamagata and Niigata Prefecture- were affected.

Miyagi Prefecture

- Sendai Airport flooding

- Costal towns damage by 10m tsunami

- Large-scale loss of life

- Onagawa nuclear plant , partly fire, partly driving ban

- Sony's 6 factories shutdown (4 factories in Miyagi, 2 factories in Fukushima, Tagajo chemical components (Sony Chemicals) 1st floor flooded

- Murata Manufacturing shutdown (Miyagi and Tochigi Prefecture)

- JX Nippon Oil Factory damage

- Toyota Motor, factory shutdown

Fukushima Prefecture

- Fukushima 1,2,3,4 nuclear plants shutdown and unstable (radioactive spill concern continued)

- Nissan Motor, 6 factories shutdown

- Panasonic factory disruption (Fukuyama Prefecture factory, Sendai factory in Miyagi Prefecture included)

Aomori Prefecture

- Power supply to 4.4 million households stopped

- Pioneer, factory damage (Aomori, Yamagata Prefecture)

- Renesas, factory shutdown

Chiba Prefecture

- JFE Holdings, steel factory fire

- Cosmo Oil, factory fire

Ibaraki Prefecture

-  JSR, factory production stop

- Tokyo Gas, gas supply stop

- Sumitomo Metal Industries, smelting furnace temporary stop

- Daikin Industries,  production stop

- Murata factory was destroyed and his component short ship after the Ipad Production in Foxconn China

Sharp LCD Panel factory shout down and affecting 20% world LCD panel output.

Mitsubishi Gas Chemical Inc. (MGC), Monday that two of its facilities, one in Fukushima prefecture and one in Ibaraki prefecture, shut down due to partial damage to equipment and buildings, Its major product bismaleimide triazine resin, an epoxy resin used in chip making is almost entirely produced by MGC

This shortage of BT would most impact programmable logic vendors Xilinx Inc. and Altera Corp., as well as Qualcomm Inc.  

Sanyo, Sharp and Panasonic have already suspended operations at several of their plants. The brand new multibillion dollar Sharp LED display plant in Sakai, which has been designed to handle earthquakes automatically shut down when the first earthquake, tremor was detected.

Sanyo, Sharp and Panasonic have already suspended operations at several of their plants. The brand new multibillion dollar Sharp LED display plant in Sakai, which has been designed to handle earthquakes automatically shut down when the first earthquake, tremor was detected.

The consequence is many sectors of the Japanese factories would be affected and it may take a few month 3-9 months to resume normal operation.

We foresee that this will force them to think a head seriously for overseas factory volume implementation. They will keep some of their high technology products manufacturing overseas whereas Japan used to keep them locally.

There will be more open opportunity for other overseas countries to gain more exposure for working with Japan to build more Hi end Electrnics and semiconductor products. Whereas more jelly bean products are loaded to overseas.

More Investor will shift more portion of their investment into Korean Electronics giants like Samsung and LG!

HK Snob

Semiconductor material Supplier Chain breakdown After Japan Quake

One of the potential problems for the semiconductor industry resulting from supply disruptions in the wake of last week's Japan earthquake could be shortages of bismaleimide triazine resin, an epoxy resin used in chip making. The resin is almost entirely produced by Mitsubishi Gas Chemical Inc. (MGC), Monday that two of its facilities, one in Fukushima prefecture and one in Ibaraki prefecture, shut down due to partial damage to equipment and buildings. The rolling blackouts currently in force in the region may affect future MGC operations, including operating at sites that were not damaged in the quake.

This shortage of BT would most impact programmable logic vendors Xilinx Inc. and Altera Corp., as well as Qualcomm Inc.  

Hitachi Chemical Co. Ltd. makes an alternative resin—MCL-E-679—that has been qualified by a few suppliers, but she said she has not been able to verify whether the production of that material was impacted by the quake. Several Hitachi manufacturing sites were damaged in the quake and remain idle. 

Matsumoto noted that MediaTek Inc. does not use BT in its packages, but that Spreadtrum Communications Co. Ltd. does. Matsumoto said Texas Instruments Inc. uses BT in its packages, but that since TI's Miho fab was damaged in the quake and won't return to full production until at least July, the BT issue should be resolved before it becomes a problem for TI.

Amkor Technology Inc. manufacturing facility in Kitakami, Japan, located about 260 miles northeast of Tokyo, has suffered relatively minor damage. The Kitakami facility is currently closed due to power supply interruptions and plans are underway to restore production capabilities at the site when power, gas and water supplies, and transportation systems are stabilized. 

The Kitakami facility is Amkor’s smallest operation in both units and revenue, generating approximately $10 million to $11 million of monthly sales prior to the earthquake. The Kitakami facility only provides services to a few Japan-based customers.  

Amkor is a major supplier of semiconductors, silicon wafers, specialty chemicals, substrates, equipment and other supplies to the electronics industry, and the industry is currently evaluating the potential effect of the earthquake on the overall supply chain for electronics. Since the earthquake, we have been in close communication with our customers, suppliers and OEMs to analyze the situation and evaluate alternative sources of supply where appropriate. Like many companies in the semiconductor industry supply chain, we operate with multiple suppliers from different geographic regions. This diversification is intended to help mitigate any potential disruptions from events such as these. However, it is too early to comment on the broader impact the earthquake may have on the electronics industry and our business and operations.'' 

Advanced Semiconductor Engineering Inc. (ASE) is also obtaining ''molding compound'' from Korea and China. This was after its suppliers in Japan were impacted by the quake.

Sources: Semiconductor packaging News.

HK Snob

Electronics Component Market after Japan Quake

In spite of the 9.0-magnitiute Japan earthquake and the ensuing devastating tsunami striking Japan on March 11, The Component supply chain has been serious disturbed in Japan. This include the NAND Rams that price has been surged up more than 7% since last Friday. Many of the components of the certain electronics devices are still made in Japan. There is a immediately need for Japan to re-construct and well plan their suppliers for souring the right component for their products, beside, the rise of Japanese Yen exchange would force to speed up their oversea production scale up plan. Counties like Philippines, Thailand, Malaysia and China will be the ones to be beneficiated by these move.

However on the other side, Japanese and most of the major Asian Cities would speed less on Electronics products, computer, iPad2, Note book in coming 2-3 quarters.

Some good news is Chairman Morris Chang of Taiwan Semiconductor Manufacturing Co. (TSMC) yesterday said his firm’s goal of achieving a 20% sales growth, denominated in the U.S. dollar, will remain unchanged.

Overall, people tends to spend less on luxury goods, electronics hand held product as such handphone, GPS systems, and RAM, LED, LED, IC CPU, Capacitors, RAMs and  Panel will be rising their price in the coming 6-9 months.

HK Snob

Automotive IC Market Would Expect to Grow 12% in 2011

According to the latest IC Market Drivers report, global shipments of new cars are expected to rise almost 5% in 2011 to 55.8 million units. Meanwhile, sales of new cars in China outpaced new car shipments in the U.S. by 50% in 2010; a trend that is expected to continue through 2015.

The new demand on Automotive markets in China, emerging Southern America along with recovering U.S. These new Automobile shipments, increased on-board-electronics would boost automotive IC sales up to as much as 12% in 2011, to estimated $17 billion.

This follows a 45% increase in automotive IC Sales in 2010, which halted a two year slide in this IC sector.

Automobiles are a fertile environment to implement new and innovative electronic systems and ICs. Many of these systems are competitive selling points for automakers. Growth drivers for ICs over the next several years include active safety and telematics systems, communications and entertainment convergence, and "green" initiatives such as energy savings and reduced emissions. These technologies are increasingly available as standard equipment on new cars across all price ranges.

In the area of safety and telematics, systems such as self parking, active cruise control, lane departure warning systems, road tracking system, Gear tooth sensor, speed sensor, temperature sensor, air bag sensor,  fuel injection control sensor, electronic stability control--ESC, etc…have been widely implemented in modern cars.

New trend for Luxury car would go for as many as 12 air bag and air belts that would incur a lot of additional electronics and control.

There is not much innovative changes in the basic engine design, the Hybrid car is still in very early stage of penetration, all it take at least 10 more years to see a reasonably number of cars running on road, starting in the congested cities of Asia, Europe and America.  In fact, relatively stable gasoline prices led to a decline in hybrid vehicles sales in 2010. Recent Middle East event would force for a rise of Gasoline price.  And urge for an early Hybrid Automotive market development. Shipments of hybrid and electric vehicles are forecast to increase a modest 5% in 2011.

However the electronics on board an automotive would becomes sophisticated.  There are at least 350 LEDs as an average compact car. Full LED head lamps is not a sales gadget for Luxury car, but for a better outlook design, power saving, long life time, faster response.  This involves a lot of associated electronics, control modules required including LED driving IC, dimming control IC, Switching mode control ICs for the power converter, and light control multiplex ICs.

Many of these systems will soon be required for all new cars sold in the U.S. An ESC system typically consists of three sensors--a gyroscope, an accelerometer, and a pressure sensor--all of which can be made using a microelectromechanical system (MEMS) process.

Automakers are testing systems that will allow smartphones to dock with a large display on the car's centre console allowing the driver to access the Internet, listen to his or her stored favourite music, and send text messages through a large, onboard touch-screen rather than using the phone itself, and essentially replacing radio/CD/nav systems on cars sold today. On board GPS is a standard accessory on a luxury car.

Through 2014, the automotive IC market is forecast to grow to $21 billion, representing an average annual increase of 14% per year from 2009 to 2014. That growth rate tops the IC growth rate in all other system markets including computer (12%), communications (8%), and consumer (10%) systems, and the total worldwide IC market (10%) over the same time frame.

In Short, the ICs demand for Automotive would increase 12% in 2011.

HK Snob

IC Market Analysis

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