3Q09 chip growth sets stage for 22% surge in 2010, says Future Horizons
Press release; Jessie Shen, DIGITIMES [Wednesday 4 November 2009]
Chip sales hit US$24.0 billion in September, heralding a 20% quarterly increase
on third-quarter 2009, according to Future Horizons. The UK-based research firm
has raised its forecast for the 2009 chip market to a 10% drop versus an earlier
estimate of minus 14%.
"We now see the market declining only 10% over 2008, a truly remarkable recovery
considering the abyss we were staring into just this time last year. September's
sales were even higher than our optimistic best expectations. This recovery now
has a momentum of its own," commented Malcolm Penn, chairman and CEO at Future
Horizons.
The market rebound started at the end of the first quarter, with the second
quarter coming in at 17% sequential growth, Future Horizons said. With the third
quarter now up a further 20% and fourth-quarter market guidance in the 5% to 7%
range, the 2009 market is set to close out at between US$220-225 billion.
"Psychologically this ought to give everyone a shot in the arm but instead
there's a strange air of disbelief and denial in the air," said Penn. "The fact
of the matter is no-one believes anything any more; I wish, really wish I was
back running a chip division again. The competition's so befuddled you could
walk all over anyone without even trying."
The big question when the second quarter's results were announced was: "Is this
the start of the chip market recovery or merely a blip on the chip statistics
radar screen?" Driven by the bean counters and financial community, most CEOs
took the latter view and path of least resistance and continued to downsize,
Future Horizons indicated.
Commenting on some of the other underlying issues, Future Horizons believes that
the normal dynamics following any market collapse are (Phase 1) over-reaction,
cutting back production and inventories too far; (Phase 2) a correction phase to
rebalance over-depleted inventories; and (Phase 3) a resumption of demand-driven
orders.
Phase 1 kicked in last September with the Lehman Bros collapse, with Phase 2
starting in March 2009. The industry is now firmly and clearly in Phase 3 of the
recovery cycle, in line with Future Horizons' January 2009 forecast. "The only
difference between our earlier forecast and reality is that the recovery is
coming in stronger than even we dared to predict," said Penn.
Looking ahead to 2010, Future Horizons believes growth will be 22% up on 2009,
just based on benign 'normal' quarterly growth patterns, dramatically ending a
five-year 'zero-growth' period, without taking into effect any recovery in the
world economy or price increases due to product shortages and lack of wafer fab
capacity. That would mean a US$272 billion market, well in excess of the 2007
peak (US$256 billion).
"A 20%-plus growth year will nail the coffin of the 'chip growth is over'
merchants of doom, especially when 2011 is likely to be even stronger still,"
Penn continued. "This industry's not changed one iota and market trends are
still not based just on rational decisions but emotional ones as well. It is
this that creates new market opportunities."