How are Semiconductor Sales Shaping up for the First Quarter of 2015?

by Semiconductor Industry Association

Next Monday, SIA will release its March 2015 global sales report (GSR), which will include sales totals for the first quarter (Q1) of 2015. With two-thirds of Q1 sales already in the books, how should we assess semiconductor sales thus far and what questions should we be thinking about ahead of next week’s GSR release?

The good news is global sales to date are higher than through the same period last year, despite the market experiencing some added headwinds to go along with typical Q1 seasonality. Sales through February were 6.2 percent higher than through the first two months of 2014, an assuring sign that the industry is still in the midst of a cyclical upturn. As SIA reported in last month’s Global Sales Report, February 2015 sales marked the 22nd consecutive month of year-over-year sales growth for the industry.

Regarding market headwinds thus far in Q1, VLSI’s Andrea Lati provides a nice summary in his recent interview with his colleague Dan Hutcheson, which I recommend. Among the challenges Andrea points to are the mobile and table market, which he notes are maturing and experiencing downward pricing pressure. One added headwind I would add is the continued strengthening of the dollar. This has depressed some foreign market sales figures reported in the World Semiconductor Trade Statistics (WSTS) program, which values global sales in dollars. For example, the weakening of the yen and euro to the dollar contributed to year-over-year sales growth in the Japanese and European markets to decrease in January and February despite unit growth in these two markets increasing.

So what should one be focusing on regarding Q1 results when March sales are announced next week? Most important will be comparing Q1 2015 sales to Q1 2014 sales. One would expect positive March monthly year-over-year growth (after all, it has been positive for 22 consecutive months), which would imply positive year-over-year quarterly growth. More instructive perhaps will be comparing the pace of year-over-year sales growth through the quarter from January through March. Did the pace slow down, increase, or remain relatively steady through each successive month?

Another question to consider is how did Q1 2015 sales compare to Q4 2014 sales? Historically, Q1 quarter-over-quarter sales growth has been negative due to typical market seasonality, and WSTS has forecasted quarter-over-quarter sales to decrease by 3.4 percent. The interesting question is how will actual Q1 sales growth compare to the WSTS forecast? And if actual Q1 growth is less than forecasted, what would this result imply about annual growth for 2015? In November, WSTS forecasted 2015 annual growth at 3.4 percent, which it more recently revised up in March to 4.9 percent after accounting for actual end-of-year 2014 sales. The Q1 results will likely have an impact on how WSTS might revise its end-of-year forecast at its upcoming May forecast meeting in Los Angeles.

So, while the year is relatively young, we nevertheless have much to consider in anticipation of next week’s March global sales report release!