NEW TRIPOLI, USA: The semiconductor industry has undergone seven major cycles since 1970s, triggered by various factors including worldwide recession, overcapacity and inventory burn. Cycles are not necessarily all bad.
Downturns represent an opportunity for new entrants – few firms have managed to penetrate the entry barriers during an upturn while upturns allow incumbents to garner profits from their earlier investments.
In addition to these major cycles, there are numerous minicycles. According to World Semiconductor Trade Statistics (WSTS) statistics, memory devices fared the worst in 2008, dropping 19.8 percent to $46.4 billion. In 2010, memory devices from companies such as Micron Technology are forecast to grow the most of all sectors of semiconductors – 18.8 percent to $50.9 billion.
Conversely, logic devices from companies such as Intel and AMD exhibited the greatest growth in 2008, increasing 9.3 percent to $73.5 billion. In 2010, this sector is forecast to grow the least, only 4.4 percent to $65.5 billion from $62.8 billion in 2009.
Another minicycle is a downturn in Q1 of each year. In the past 25 years we have witnessed 15 negative sales growth occurrences versus 10 positive sales growths. Also, over the last 10 years negative sequential sales growth from Q4 to Q1 has been the "norm" in seven out of 10 years, according to the Cowan LRA Chip Sales Forecast Model.Source: The Information Network
According to analysis from The Information Network based on a comparison of proprietary leading indicators, which looks out four to six months, and semiconductor sales, we see no downturn in Q1 2010, as shown below. The V shape of the semiconductor and leading indicator curves substantiates the WSTS forecast of 12.2 percent growth for 2010.