IC Knowledge - Recovery 0903

The state of the semiconductor industry recovery as of September 2003
Worldwide revenue data for the semiconductor industry is now available from the SIA through August of 2003. An examination of how 2003 compares to 2002 can be used to gage the strength and progress of the recovery. Table 1 compares the year-to-date worldwide semiconductor industry revenue for 2003 to 2002. The percentages are year-over-year growth and are in each case for the year up to and including the month noted. For example, the data for January compares January 2003 to January 2002, the data for February compares the sum of January and February of 2003 to the sum of January and February of 2002, and so on
Table 1 - Year-to-date growth rate for 2003 versus 2002

Month

Growth

Jan

19.5%

Feb

16.7%

Mar

13.0%

Apr

12.5%

May

12.3%

Jun

11.7%

Jul

11.6%

Aug

12.4%

From table 1 two interesting conclusions may be drawn. First, 2003 is showing good growth over 2002. Secondly, through July of 2003 the growth rate seemed to be moderating as the year progressed, but then in August the recovery seems to have picked up speed.

Historically the first year of a semiconductor industry recovery has shown very strong growth with greater than 20% being quite common. This recovery is in our opinion different from previous recoveries. For many years PCs have been the largest application for semiconductors. Each time new faster processors were released, users would rapidly upgrade for the obvious improvement in PC response speed. PCs have now reached a point where a faster PC is imperceptible to the average user and the upgrade cycle has been replaced with more of a "wear-out cycle". There are hot new applications such as DVDs, MP3 players, Digital Cameras, etc. driving semiconductor demand, but these applications are too small to drive the industry the way that PCs have. Our belief is that the industry will see more moderate growth over the next few years unless some new "killer application" emerges for the PC.

For 2003 we are now raising our growth expectation to 12% to 14% growth. The recent firming suggests to us that the next several months will be strong driving up the growth rate.

Related articles

Recovery Status September 2003 - is the recovery picking up speed? (09/29/2003); Recovery Status August 2003 - the first six months of 2003 have shown growth over 2002, but as each additional month of data is added the year-to-date growth rate is falling. (08/28/2003); Business conditions July 2003 - What is the status of the semiconductor market as of July 2003. (07/27/2003); Has the recovery stalled? - an updated examination of monthly sales data for the worldwide semiconductor industry shows that from mid 2002 to March of 2003 the industry had started out performing 2001, but now revenue has fallen back to 2001 levels. Has the recovery stalled? (06/03/2003); Has the recovery begun? - an updated examination of monthly sales data for the worldwide semiconductor industry shows that since mid 2002 the industry is out performing 2001. Is this a recovery? (05/18/2003)

Month	Growth
Jan	19.5%
Feb	16.7%
Mar	13.0%
Apr	12.5%
May	12.3%
Jun	11.7%
Jul	11.6%
Aug	12.4%