A Semiconductor Industry Stimulus Plan

Last week Semico released its industry forecast outlook for the balance of 2011 and 2012. Unfortunately, all the indicators have moved 2011 into the negative territory. Semiconductor sales will end the year 1.6% lower than 2010. That should not be too surprising as the Semico IPI began moving down in May of 2010, warning us of a sluggish second half 2011. The economic malaise, along with the natural disasters around the world has only made semiconductor sales even more challenging.

The good news is that the Semico IPI points to a bottom in the first quarter 2012. Not only are all the economic and supply chain indicators pointing to a better 2012, but it is also consistent with the industry technology cycles. Intel is rolling out their 22nm process technology by the end of this year. GLOBALFOUNDRIES and TSMC are ready with their 28nm processes.

New technologies mean new products or at least new features for our existing electronics devices. In addition, the good news is that GLOBALFOUNDRIES remains committed to their capacity expansion and technology development plans. Fab expansions at their Fab 1 in Dresden and Fab 8 in New York remain on schedule. And at their recent GLOBALFOUNDRIES Technology Conference in Santa Clara, company executives proudly discussed their continued push to develop 20nm processes and even 14nm.

This is all good news for the industry. New technology opens the door for new electronic products and new features for our existing products. The addition of large scale manufacturing capacity helps reach economies of scale quickly for reduced costs. How can this be a stimulus? Cell phone vendors and tablet makers (including ultrabook manufacturers) and even TV/set-top box companies have a great opportunity to stimulate the electronics market by enticing us to buy a new device with a ‘must-have’ feature that consumers can’t live without.

This industry has always grown on the backs of those who lead the pack with new technology and innovative designs. Combine a faster, lower power processor with a sensor and a new application and that’ll get consumers and businesses excited again! A good time to roll out some new products will be the second half of 2012. Cell phones and PCs will be in another refresh cycle and the automotive market will return to normal production levels after suffering setbacks in 2011.

If you’d like more details on Semico’s IPI and the outlook for semiconductor sales in 2012, visit Semico’s website.

Joanne Itow
Managing Director