The market growth to continue for semiconductor industry in remaining quarters of 2010

After a 9% fall in revenue in 2009, the semiconductor industry is geared up for a growth of 20% in 2010. Industry has seen both fall and rise in 2009 itself, by end of 2009 the recession was out. Now it is time for planning growth.

The growth in shipment of portable computers, smartphones, HD TVs, Automotives, Solar and energy, and medical electronics demanding more chips and devices from semiconductor vendors. It can be SoC chip or a passive component, the small, smart, fast and energy saving device are in full demand. Hardly you can find market domains, which are not growing; you can stay away from dirty technologies (environment damagers).

But the growth is more seen in shipment rather than by revenue in most of the application domains. This is a bit concern for chip vendors with high profit margin. In this innovation and volume driven industry falling price of chips is the tough thing to manage. This trend is seen not only in devices but also in products. See the mobile phone market in India, now Nokia is having tough competition from local phone makers whose devices are as reliable and feature rich as phones from leading brands and also are less expensive. This is good news for semiconductor vendors so that they have more customers.

There are plenty of opportunities and also the revenue sucking pits. However the 2010 is going to be a happy year for semiconductor industry and 2011 is going to be quite hopeful.

Here is a couple of latest market data and forecasts for you:

SIA has reported that worldwide semiconductor sales in March 2010 were $23.1 billion, an increase of 4.6 percent from February when sales were $22.0 billion. Sales increased by 58.3 percent from March 2009 when sales were $14.6 billion. The first quarter of 2009 marked the low point in semiconductor sales during the global economic recession. Sales for the first quarter of 2010 were $69.2 billion compared to $43.7 billion for the first quarter of 2009. All monthly sales numbers represent a three-month moving average.

Comments from George Scalise, SIA President:
"Foundries and integrated device manufacturers are ramping production to bring supply into line with expected demand levels. We do not expect to see near-term issues with either excess inventories or capacity due to strong unit demand in key end markets. Computing and communications, which together account for more than 60 percent of total demand for microchips, are seeing healthy unit growth. PC unit sales are projected to grow in the mid- to high-teens, and handset growth is expected to be in the high single-digit range."

"The current results reflect improved sales in a variety of market segments, including the enterprise sector where recovery has been slower than in the consumer sector. Healthy economic growth in China and growing demand for PCs and cell phones in developing economies were major contributors to growth in the first quarter. Continued growth for the semiconductor industry is closely tied to continuation of the global economic recovery. We remain cautiously optimistic that global sales will show double-digit growth in 2010," Scalise concluded.

Market Researcher IDC's market report highlights:

While many companies saw revenue declines in 2009, there were several that were able to grow the top line in 2009. Among them were Atheros, Cavium, Mediatek, NetLogic, Synaptics, and Richtek, which all enjoyed double digit year-over-year growth in 2009. DRAM memory markets also partially bounced back in the second half of 2009, resulting in revenue growth for Samsung, Hynix, Elpida, Micron, and Nanya Technology. Similarly, increased NAND demand in the second half of 2009 helped NAND suppliers such as Toshiba, Samsung, and Micron.

"This is not a surprise, as demand for wireless products, intelligent networks, embedded processors, and touch-based user interfaces increased tremendously in the second half of 2009," said Mali Venkatesan, research manager at IDC, who led the study and compiled the Semiconductor Market Share market and company view.

"Overall, the semiconductor market in 2009 started with doom and gloom, but ended up with optimism for a strong recovery in 2010," added Venkatesan. "So far, 2010 is already proving to be very strong. Semiconductor inventory checks indicate strong demand in the first half of 2010 with order rates expected to normalize in the second half of the year. Assuming there are no macroeconomic shocks to global economy, IDC expects 2010 to be a banner year, with 16-18% year-over-year semiconductor revenue growth. The big question now is: What will be the market outlook in 2011?"