Market research firm iSuppli is concerned that the stockpiling of semiconductors "could spell trouble" if chip makers made the mistake of overestimating market growth. Semiconductor suppliers are currently holding onto 83.6 days of inventory (DOI), the highest level in two and a half years. The last time inventories were this high, it preceded a semiconductor downturn, and iSuppli warns it could happen again.
Worldwide semiconductor sales ratcheted up nearly 32 percent year-on-year in 2010 and reached a record $298.3 billion, according to the Semiconductor Industry Association.
"Semiconductor sales are a bright spot in our current economic picture, delivering a record high in the billions. The year-over-year growth is due in part to the increased use of semiconductor technology in a wider range of electronic devices that we have come to enjoy in modern life," said Brian Toohey, president, Semiconductor Industry Association. "Our member companies continue to ramp up their operations to meet the growing demand for semiconductor innovation."
SIA says all major semiconductor product categories showed double-digit growth for the year, and this despite a "modest decline of 3 percent" for the month of December compared to one month prior. For 2011, SIA predicts single-digit growth for the industry as a whole.
Globalfoundries has one simple goal -- to become the biggest contract manufacturer of computer chips on this or any other planet. Working towards that goal, the company will increase spending from $2.7 billion in 2010 to $5.4 billion this year, the company's CFO, Robert Krakauer, said in an interview.
The increased spending will be used to upgrade a plant in Dresden, Germany, as well as putting up two new plants, one in New York and one in Abu Dhabi.
Not many chip makers can spend the kind of money Globalfoundries has allocated, the Taiwan Semiconductor Manufacturing Company (TSMC) being one of the ones which can. TSMC spent $5.9 billion in 2010 and expects to spend even more in 2011. Intel ponied up $5.2 billion last year, and Samsung trumped them all by spending around $10 billion.
Worldwide semiconductor sales for November 2010 reached $26 billion, down 0.9 percent from one month prior, but up 14.4 percent from the same month in 2009, according to new data by the Semiconductor Industry Association (SIA).
"Despite continuing macroeconomic uncertainty, the semiconductor industry is slated to close the year at record sales levels with year-over-year growth rates not experienced in nearly a decade," said SIA President Brian Toohey. "The application of advanced technologies continues to further the proliferation of semiconductor content into a wider range of end products including media tablets, smartphones, eReaders, and automobiles, resulting in impressive semiconductor sales in 2010. We expect continued moderation in sales growth, in line with our November forecast."
For the whole year up to November, sales surged 34 percent to $271.8 billion, a staggering $202.8 billion increase from the same 11 month period in 2009. By 2012, SIA expects semiconductor sales to reach $329.7 billion.
Recession smession -- according to market research firm Gartner, worldwide semiconductor revenue hit an all time high in 2010, "reaching a landmark $300.3 billion." That's up a whopping 31.5 percent from 2009, Gartner notes.
"In 2010, the semiconductor market was driven by pent-up demand as system makers scrambled against depleted inventories to obtain parts," said Stephan Ohr, semiconductor research director at Gartner. "Manufacturers — both integrated device manufacturers (IDMs) and foundries — scrambled to put new capacity in place. With slowing demand and a weakening consumer confidence in the third quarter, lead times are coming down and inventories are slowly starting to build. Still, semiconductor vendors are working on fulfilling backlog orders, and 2010 will go on record as a banner year for the semiconductor industry."
As usual, Intel clung to the top spot, the 19th consecutive year the chip maker has done so, and despite losing a tiny bit of share in 2010. Intel now claims 13.8 percent of the semiconductor market, down from 14.2 percent in 2009, but still ahead of Samung, which now holds a 9.4 percent.
The Semiconductor Industry Association (SIA) wants you to know that there's absolutely nothing to worry about, so you can quit stressing about the potential impact a down economy might be having on semiconductor sales. You know, in case that's the sort of thing you lose sleep over.
"Worldwide sales of semiconductors were strong in July despite growing indications of slower growth in the overall economy," said SIA president Brian Toohey. "Although recent public statements from a number of major manufacturers have emphasized limited visibility for the near-term, we continue to expect that industry growth for 2010 will be in line with our mid-year forecast of 28.4 percent."
According to the SIA, global chip sales climbed to $25.2 billion July, an increase of 1.2 percent from $24.9 billion in June and a whopping 37 percent spike from $18.4 billion from this time period one year ago. In addition, chip sales are up almost 50 percent in the first seven months of 2010 compared to last year.
"The semiconductor market already was in for beefy growth in 2010 because of strong consumer demand for electronic products," observed Dale Ford, senior VP for iSuppli. "However, it's now apparent that semiconductor sales are getting an infusion of growth hormone in 2010 because of a number of factors, including rising prices, inventory buildups and richer chip content in key electronic products like smartphones and advanced LCD TVs. All this is causing chip revenues to bulge to awesome dimensions this year."
If iSuppli's crystal ball is to be believed, worldwide semiconductor revenues in 2010 will climb to $310.3 billion, up 35.1 percent from $229.6 billion in 2009. That's a fair amount more than the 30.9 percent growth rate iSuppli predicted earlier this year.
iSuppli's confidence in the semiconductor industry doesn't stop there. While some have compared the recent upswing to that of the year 2000 and warns that the bubble could again pop, iSuppli says these are two very different scenarios.
"The most common word that is heard in the last month regarding the economy and the semiconductor industry is 'double-dip,'" Ford observed. "Fears abound that the market's recent success is too good to be true and that an imminent correction is due. However, iSuppli does not agree with a double-dip outlook. Rather, iSuppli projects a return to more standard growth patterns in the second half of 2010 and into 2011 that will result in semiconductor revenue growth of 7% next year."
It's shaping up to be a great year for semiconductor foundries, says market research firm iSuppli, which predicts that revenue will reach $29.8 billion by the end of 2010. If it does, that will represent a 42.3 percent increase from last year, when revenue settled in at $22.1 billion.
Semiconductor foundries are adjusting to the growing demand for consumer products, following a rough recession in which spending slowed way down starting in 2008. The landscape is decidedly different now, however, and iSuppli says foundries will likely spend 123 percent more on capital equipment this year than they did in 2009.
China, which hasn't expanded aggressively as it should have and hasn't come up with many technological advancements, has forfeited its role as a leader in contract manufacturing, a position which now belongs to Taiwan, iSuppli added.
It wasn't a monumental leap, but global semiconductor sales went up 4.5 percent from April to May, settling in at $24.7 billion, says the Semiconductor Industry Association (SIA). The rise in sales was helped by steady demand for PCs, mobile phones, IT upgrades, industrial applications, and even automobiles.
"Growing concerns about issues such as government debt, declining consumer confidence, and pressures on government spending do not appear to have affected worldwide semiconductor sales to date," SIA President George Scalise said.
Peering into its crystal ball, SIA predicts PCs to grow by 20 percent this year, though it's unclear if the emerging tablet market falls into this category. Likewise, SIA said mobile phones will grow somewhere between 10 and 12 percent this year.
Despite reports to the contrary, market research firm iSuppli warns that semiconductor inventories are too low to sustain demand, The Wall Street Journal reports.
"When measured in terms of [days of inventory], chip supplier stockpiles for the 10 semiconductor product categories tracked by iSuppli appear to be within the range of normal seasonal equilibrium," said analyst Carlo Ciriello. "However, iSuppli believes these numbers are misleading and that the supply chain is actually leaner than current levels indicate."
iSuppli's bean counters determined that global semiconductor inventory amounted to $25.73 billion in the first quarter of 2010, up just 1 percent from $25.48 billion in the previous quarter, and barely rising to the tune of 0.2 percent from the first quarter of 2009.
The numbers are somewhat deceiving, says iSuppli. During the 69 days in the first quarter, days of inventory rose 3.2 percent from the fourth quarter and appear to be strong. But that isn't the case when factoring in both reported revenue and inventory value, as well as adjusting cost of goods. When all is said and done, the metric drops 20 percent below the seasonal average, iSuppli said.