But what is driving improved sales, and is this growth sustainable?
January 2017 semiconductor sales exceeded $29 billion, representing a 10.6% increase over January 2016 and a decline of 10% from December 2016. The average weekly industry ship rate for January was $7.3 billion. Extending this ship rate for the year would produce an annual revenue of $380 billion or 10% growth. Semico is forecasting a couple of slow months and some price degradation on a few key product lines over the course of the year. The bottom line is that our 5.3% forecast is well in target with a potential for additional upside growth.
What is driving the improved January sales, and is this growth sustainable?
As part of its detailed industry analysis, Semico tracks emerging and high volume end applications that have the biggest impact on unit demand and the markets that are affecting consumption of semiconductor devices. Although total cell phone sales are expected to slow, low-end smartphones are expected to grow over 20%. Semiconductor content continues to grow in both high- and low-end smartphones. In addition to the established markets such as cell phones and computing devices, Semico is tracking a number of emerging markets. Virtual reality and augmented reality devices grew over five times in 2016 and are expected to more than double in 2017. In addition, drones are expected to register 40% growth this year.
ASP’s fell 4.9% from December 2016 to January 2017, in spite of a relatively strong revenue and unit month. Units were only down 3.9% from December and up 15.2% compared to January 2016. While unit demand is strong, industry competition has not waned and for the first time since 2014, ASP’s fell in the first month of the year.
Industry capital expenditures have been growing over the past few years and from a semiconductor capacity standpoint, most foundry and IDM fabs are not completely full. As a result, Semico does not anticipate shortages or product lead times to substantially change during 2017.