Micro Logic 2009: Finishing Strong

About this time last year not many people wanted to believe me when I said that the Micro Logic market (microprocessors, microcontrollers, and DSP) would bounce back in 2H 2009 and with a strong upward trend.  Fear, uncertainty and dread (FUD) due to the worldwide economic crisis was driving companies to make severe cutbacks on their manufacturing plans and consequently reduce inventory levels.  Some plans, like Dell and HP lowering production to unusually low levels for 1Q 2009 were self fulfilling prophecies.  It just appeared that the steps taken by most OEMs were extremely drastic.  Semiconductor inventory levels had not been that low in anyone’s recent memory. 

The automotive market had lots of problems of overcapacity and high inventory levels of vehicles.  This is the largest market for MCU sales.  Governments stepped in with programs to stimulate consumption.  The US passed the “Cash for Clunkers” program and Germany had a similar one.  As we approach the end of 2009, vehicle sales are improving in all global markets.  Semico’s discussions with key suppliers to the automotive market indicate a more positive outlook at this time.

In the PC market 2009 marked the dominance of portability.  Notebook PCs exceeded desktops on a quarterly basis mid-year.  Netbooks have emerged as its own distinct category.  Combining netbooks and notebook PCs, mobile PCs have surpassed desktops.  The launch of Windows 7 and new MPUs from both Intel and AMD has spurred renewed interest in PCs.  The delayed purchases of 1H 2009 are also contributing to the strong surge in 2H 2009.

The economies around the world have not fully recovered.  Governments around the world are continuing efforts to stimulate the economy.  Automotive is still down but on an upward trend.  Corporations will be going through a refresh cycle for PCs that are three or more years old.  Micrologic will end 2009 down 7.0% ($49.4B), but MPUs are flat relative to 2008.  Semico foresees pent up demand driving renewed growth in 2010 and is forecasting ML growth of 14.2% up to $56.5 B.