Mid-Year Industry Update: In Like a Lamb, Out Like a Lion? It Depends

Mid-Year Industry Update: In Like a Lamb, Out Like a Lion? It Depends

By Lara Chamness, Senior Manager, Market Analysis

2016 was expected to be a modest growth year for the semiconductor industry; initial forecasts for the year were predicting that semiconductor revenues would grow in the low single digits for the year. However, strength in the market has failed to materialize. Year-to-date data indicate weaknesses in many key segments with year-over-year declines recorded for device shipments and revenues, equipment billings, and wafer area shipments. The figure below compares initial 2016 semiconductor revenue forecasts with mid-year forecasts for the year. While many are forecasting low-single digit unit growth for semiconductor devices, average selling price (ASP) trends will drag down the overall revenue outlook for the industry.

One bright spot are semiconductor equipment bookings that are showing a 6 percent year-over-year increase (see figure below). The strength in bookings is boding well for a stronger second half of the year and is supported by 2016 capex plans by Intel, Samsung and TSMC as detailed by IC Insights’ recently released bulletin.

Other segments are showing positive momentum. First quarter silicon volume shipments, as well as equipment bookings and billings were higher than the fourth quarter of last year. Quarterly increases continued into the second quarter for equipment bookings and billings, silicon wafer volumes, and leadframes. The World Semiconductor Trade Statistics showed that device shipments increased 5 percent, resulting in a 1 percent increase in chip revenues in the second quarter when compared to the first quarter. Based on past data trends gains are expected to continue into the third quarter as the third quarter, on average, is the strongest quarter for semiconductors.

The lingering question is, “will the gains in the second quarter and anticipated gains in the third be enough to offset the typically slow fourth quarter?” The answer is, “it depends.” From a device perspective it does not appear it will, as evidenced by the current mid-year outlooks depicted above. However, from an equipment and materials point of view the future is more promising. SEMI is expecting the semiconductor equipment market to increase a nominal 1 percent this year, while the materials market will increase just under 2 percent, which would put the equipment and materials markets at $36.9 billion and $44.1 billion, respectively.

For more information on market data, visit www.semi.org/en/MarketInfo and attend the upcoming SEMICON Taiwan (September 7-9 in Taipei) or the Strategic Materials Conference (September 20-21 in California). 

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Global Update
August 16, 2016