On March 2, 2014 the Semiconductor Industry Association (SIA) announced that worldwide sales of semiconductors reached $26.3 billion for the month of January 2014, an increase of 8.8 percent from January 2013 when sales were $24.2 billion. After adding in semiconductor sales from excluded companies such as Apple Inc. and SanDisk Corp., that total is even higher, marking the industry’s highest-ever January sales total and the largest year-to-year increase in nearly three years.
These results are in-line with the Semico Research Corp.’s IPI Index which has been projecting strong semiconductor revenue growth for the first and second quarters of 2014. The January results once again validate the predictive accuracy of IPI. The Semico IPI index accurately predicted the industry turnaround point that occurred in February 2013 and predicted growth from second quarter 2013 through the second quarter of 2014. Semico is projecting sales in the first quarter of 2014 will increase by 0.9 percent, which, for a seasonally ‘down’ quarter, bodes well for the rest of 2014.
But what is specifically in store for the 2nd and 3rd quarters of 2014? Samsung’s new Galaxy S5 will launch in April 2014 in the US. If Apple follows their traditional pattern of new product releases, the iPhone 6 and a new tablet, possibly the iPad Air 2, are expected from them in the second half of 2014. But new high-end smartphone and tablet models could cause consumers to postpone purchases in a wait-and-see approach in order to complete a thorough comparison shopping analysis. Real growth is coming from mid-range and low-end smartphones selling in markets like China, Russia, and India.
The Semico IPI projects industry inflection points one year in advance. Over the past 20 years, the IPI has accurately predicted the direction of semiconductor sales for every major disruption that has occurred in the industry. Do you know if you’ll be looking at a bull or bear market next year? Stay informed with our IPI Index and see which way the wind is blowing for the rest of 2014.
Jim Feldhan is president of Semico Research Co.