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April IC growth strongest since 1996

Posted: 24 Jun 2009 ?? ?Print Version ?Bookmark and Share

Keywords:chip market? semiconductor? IC equipment?

Semiconductor sales in April were 15.6 percent higher than the previous month's, if the fact that March was a five-week month is factored in, according to market research group Future Horizon.

The actual figures for March 2009 showed a 7.6 percent decline.

That would make the April performance the strongest month-on-month growth since April 1955, according to Future Horizons' June market report.

However, there is a proviso. "Given the still delicate state of the global economy, this growth is not however directly driven by increased end-user demand, instead it is purely a correction to the steep Q4 08/Q1 09 inventory declines," the report said.

The implication being that "the markets clearly overreacted to the September 2008 global economic collapse, sucking the supply chain dry, paving the way for this counter-balancing period of inventory replenishment."

Judging by historical trends, Future Horizons said the inventory replenishment will last through to the end of the third quarter of this year. "Beyond that, growth will depend on the underlying end-market demand," the group said.

Whilst much of the current industry tittle-tattle focuses on the 'green shoots of recovery debate (are there/aren't there?) and/or the 'shape of the downturn' (V, U, W, sharp, stretched, extended, etc), the market research suggested that the industry needs to focus on a more sober look at the underlying trends.

The group forecasted growth of between 4 to 5 percent for Q2, compared with the decline of 2 percent predicted in January.

"If true, this would represent a material change to our 2009 forecast, improving it from minus 28 to minus 21.3 percent, assuming that the second half of the year rolled out as planned, and removing most of the down-side risk potentials."

The first quarter was clearly a difficult time for the industry, the combined effect of the global recession on top of the normal Q1 seasonality weakness. "Not quite a knockout punch, but a real double-whammy," the researchers said.

The overall impact was said to be a net 12 percent fall in electronic equipment sales compared to Q1 08.

According to Future Horizons, apart from government/militarythe only sector to growevery market and geographic region was negatively impacted with Japan and Taiwan/China the worst hit.

On a more positive note, the firm suggested these areas will likely be the first to show a rebound.

The important mobile and PC industry sectors were both badly hit, says Future Horizons, the main reason being the severe slowdown in discretional consumer spending, with Q1 09 phone and PC unit sales down 16 and 20 percent respectively versus Q1 08.

"Given the magnitude of these declinesall markets, all sectors, all regions, all customers, consumers and enterprisethe industry and chip market exited the first quarter in remarkably good shape relatively speaking," the researchers noted.

"That is not to say it will be plain sailing hereon out, far from it, but that the industry has clearly weathered the worst of the storm, bloodied but (mostly) not beaten," the report concluded.

- John Walko
EE Times Europe

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