Predictions For A Good Year

First quarter 2015 is now history, and companies will soon be reporting their Q1 earnings. Here at Semico we’ve checked the IPI Index against our forecast and year-to-date actuals to see if the industry outlook is on track for 2015. Here’s the critical review.

First of all, Semico’s forecast for total semiconductor sales in 2015 is $378 billion, up nearly 9% over 2014. Units will increase to 849 billion, representing a 10.5% growth over 2014. However, there is an upside to this forecast. DRAM pricing is expected to remain strong as demand remains healthy and more complex fabrication processes reduce wafer output per fab line, limiting the potential for an over-capacity situation. In addition, the largest memory supplier, Samsung, is slowing its DRAM ramp, i.e. pushing out CapEx for DRAM capacity. The memory market has played a major role in the growth of semiconductor revenues over the past two years.

On a quarterly basis, Q1 2015 is expected to result in a sequential decline of 2.1% compared to Q4 2014 and a 5% year-over-year increase compared to Q1 2014.

Quarterly Semiconductor Revenues and Units
(In Millions of US Dollars and Units)

Source: SIA/WSTS and Semico Research Corp.

We now have January and February 2015 actual semiconductor sales. Those numbers along with the Semico March estimates appear to be right on track. The Semico IPI Index predicted the world semiconductor market would experience lower revenues in January and February, followed by strong growth most of the remainder of the year.

As predicted by the IPI Index, semiconductor sales hit bottom in February. Second quarter semiconductor sales are forecasted to increase 8.1% sequentially, an 8.2% year-over-year improvement.

TSMC already has reported March 2015 sales, and although the results were well within their revenue guidance, their March 2015 sales were 17% below January sales. TSMC’s January sales were off the charts reaching more than NT$87 billion.

TSMC Monthly Revenue (In Millions of New Taiwan Dollars)

Source: TSMC

In 2014, the IPI Index increased 10.9%, which aligns well with Semico’s 9% 2015 forecast. While the overall industry saw February revenues decline, the DRAM market bucked this trend by increasing 12%. It was the only product category with a double-digit increase. In fact, most categories declined or showed only marginal growth. However, during the past twelve months the IPI Index has slowly increased with only two months registering a slight decline. This signals an overall steady growth through the rest of 2015 with a slight chance of slowing in early summer and the expected seasonal decline at year-end.

Semico IPI Index

Source: Semico Research Corp.

For more detailed information on the Semico’s IPI Index and 2015 semiconductor forecast, please contact Rick Vogelei at [email protected] or visit www.semico.com.