You are here

Market Update: April Sales the Best in 15 Years

Phoenix, Arizona June 2, 2009 - At the Semico Summit in March, Jim Feldhan's opening remarks covered the State-of-the-Industry and the unprecedented decline in the fourth quarter 2008. While many other market observers fell into the doom and gloom scenario predicting a 20%-30% decline for 2009, Semico utilized its IPI (Inflection Point Indicator), MAP Model and extensive industry experience to refute this conclusion. Semico’s assertion was that inventories were not grossly out of balance in Q3 2008. We believed the subsequent drop in sales was an overreaction resulting in below-healthy inventory levels.

Some proclaimed that the cell phone market was going to experience a dramatic drop due to the recession. Our research and interviews showed just the opposite. Cell phones are now considered a necessity. It is the “land line” or “wired line” that is now viewed as an unnecessary extra! As far as the recession goes, consumers who are looking to reduce their monthly expenditures are researching cell phone providers to pick a less expensive plan. In many cases this results in a change in carriers which requires a new phone. Any reduction in cell phone sales due to the rise in unemployment is overshadowed by consumers changing providers to save on monthly bills. In December 2008, Semico forecasted cell phones to be down 10% in 2009, and we reaffirm this forecast.

The memory market continues to be plagued by excess capacity. However, we recently began seeing improvements and stability even in this market segment.

The semiconductor industry traditionally runs on a quarterly cycle, where the last month of the calendar quarter experiences a large surge in monthly sales. The resulting effect is that the first month of the following quarter usually experiences a significant drop in sales. Sales in April since 1996 have dropped between 17.2% - 34.8% when compared to March. The 34.8% April drop occurred in 2001 when the industry experienced a 32% decline for the year. The 17.2% drop occurred in 2004 when the year ended 28% up.

This year, April has set an unprecedented record with sales declining only mere 7.6% when compared to March 2009. As stated at the Semico Summit, our forecast for semiconductor revenues in 2009 is projected to be down between 12% and 13% versus the previous year. First quarter 2009 results were right on target with our expectations. April was surprisingly strong. Compared to January 2009, April’s sales are 21.3% higher. This is consistent with our assumption that companies overreacted and now need to plan for the second and third quarters.

Semico Research continues to maintain that the semiconductor industry will experience a revenue decline of 12% to 13% in 2009. Despite the overall market softness, we see a number of strong markets that will maintain industry unit demand. These markets include Netbooks, GPS systems and HDTV as a few examples.

If you have any questions or would like additional information on Semico's IPI monthly report, consulting or custom projects, please contact Susan Cadel at (607) 368-7600, or me at (602) 997-1637.

Add new comment

Filtered HTML

  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.