Lack of Confidence Stalls Electronics Industry Growth

10/27/2005 - A pervading sense of gloom and despondency continues to dominate the electronics industry and is beginning to threaten growth. This is the view of Future Horizons, Europe's leading electronics analyst.

According to Future Horizons, the industry's fundamentals remain strong. World Semiconductor Trade Statistics (WSTS) data shows that the weekly IC unit sales run rate bottomed in Q1 2005, at 2 billion units, increasing to 2.25 billion in Q2 2005 and an estimated 2.5 billion in Q3 2005, without any measurable inventory build up.

The WSTS data recently published for August showed strong revenue growth up 12.9 per cent month-on-month for integrated circuit shipments and 12.3 per cent for the total semiconductor market.

Yet despite strong performance the industry has yet to regain its confidence following the crash of 2001. According to Future Horizons, the industry is constantly berated by an industry-insensitive stock market leaving few companies with the aggression or ambition to provide the growth that has traditionally been the engine of the industry.

"Virtually everyone is sceptical about August's good data: bad news is good news; seized upon with a perverse sense of satisfaction, while good news is discounted as a mere aberration. This is now no longer a question of pessimism versus optimism; it is rapidly becoming an industry millstone," said Malcolm Penn, CEO, Future Horizons.

"The world's largest semiconductor firms are in danger of becoming a club of established static companies, allowing the true dynamics of the industry to flourish outside in the younger generation of companies and the new geographic entrants," added Penn.

Based on these trends Future Horizons says that it is hard to envisage Q4 growing much less than Q3, placing year-on-year growth in the 8 to 10 percent region. While Future Horizons is not in the business of fine-tuning its forecasts to come up with the right year-end number, mathematically it acknowledges that its original 15 per cent prediction is now hard to achieve.

Future Horizons stresses that this forecast reduction is not a change of analysis but is a reflection of the way that the recovery pattern has developed. The January 2005 forecast was made at the time as a strong message to industry when analysis did not support the then doomsday scenarios of negative to low-growth in 2005.

About Future Horizons
Future Horizons, founded in 1989, is Europe's leading semiconductor analyst. It provides market research and business support services for use in opportunity analysis, business planning and new market development. Its industry information seminars and Forums are widely considered to be the best of their kind. Future Horizons publishes a series of monthly, half-yearly and annual market reports, with emphasis is placed on the worldwide microelectronics and electronics industry and the European market environment.

Previous Page | News by Category | News Search

If you found this page useful, bookmark and share it on: