Semiconductor Market Ends Year on a High Note

SIA LogoThe Semiconductor Industry Association this week announced the year-end World Semiconductor Trade Statistics (WSTS) revenues for 2014.  Worldwide sales grew 9.9% to reach a record total of $335.8 billion, outperforming the WSTS fall forecast.  Annual sales increased in all four regional markets for the first time since 2010. Memory was the fastest growing segment, increasing 18.2%, partly based on DRAM growth of 34.7%.It’s encouraging that all geographical areas experienced growth.  This implies that the world economy is finally on the mend.

The industry’s 9.9% worldwide growth was a good bit lower than Objective Analysis’ December 2013 prediction of growth in excess of 20%.  We admit that we overshot, expecting both higher bit growth and stronger pricing in DRAM and NAND flash than actually materialized.

The $335.8 billion number is really impressive, though.  For over 20 years the semiconductor industry struggled to get above $300 billion in annual sales.  Last year the industry finally broke through, and 2014 ended almost 10% higher.

The semiconductor business is a remarkable industry when it grows, and it has simply miserable collapses when it suffers a downturn.

Fortunately a downturn isn’t in the cards until probably 2017, which will make this the longest growth phase in the entire 55-year history of the chip market

Anyone who wants fair warning of the impending collapse simply has to listen for folks saying: “The semiconductor cycle is dead!”  Once these get to be regularly made, a collapse is just around the corner.

Of course, our regular clients have a far better way of learning about market turns, since we provide them with ongoing health checks of the semiconductor business.  Anyone who is interested in our offerings is encouraged to contact us to discuss ways that we can help your company achieve its goals.