2011 Semiconductor Preview

We can all agree, 2010 has been a great year:  +30% growth over 2009.  The economic recovery has been a breath of fresh air after the downturn in the world economy over the last couple years.  Semico predicts 2011 semiconductor revenues to grow less than 10% over 2010.  At first glance, this looks like bad news.  After all, a drop of almost 25 percentage points has to be bad, right?  However, in reality 2011 represents a return to a normal semiconductor sales cycle.  2010 growth was so huge because 2009 was so awful.  2011's growth will be softer because 2010 was so strong, particularly in DRAM, which grew 75% over 2009. Let's focus on:

• The fact that 2011 will continue the growth started in 2010, rather than shrinking as in 2009.
• The fact that component shortages are still impacting the cell phone industry, during a quarter that is seasonally slow.
• Broadcom just raised its guidance for revenue in the fourth quarter, based on the strength of the mobile and wireless markets.
• The possibility of stronger NAND ASPs in the wake of Toshiba's NAND fab power outage last week.
• The first half of the year is seasonally weak, and not necessarily indicative of a downturn.

On the consumer side 3DTV is gaining traction, other tablet computers are competing against the iPad, automotive electronics are on the rise, and a smaller iPad could possibly be introduced next year.  This will all help electronics sales continue to shine in 2010.  And of course, CES will bring a raft of new innovations to spark consumer sales in the coming year. Source: Semico Research Corp. The industry news supports what our Inflection Point Indicator (IPI) has been showing all year.  It continues to be an accurate forecasting tool to know far in advance when the industry will go up or down.  If you'd like to subscribe to our IPI to stay ahead of the news in 2011, contact Sam Caldwell at samc@semico.com or 602-214-9697. Stay tuned for a full preview on what 2011 will bring with commentary from all our analysts!