Tag: isuppli

Chip sales down 2.7 percent in 2012

Semiconductor sales are down in line with gloomy forecasts, but things might not be as bad as they seem. Chip sales dipped $291.6 billion in 2012, down 2.7 percent from record sales of $299.5 billion in 2011.

However, the Semiconductor Industry Association believes the drop was not all that bad. Shipments still managed to beat most forecasts and things could have been even worse.

Some regions did better than others. Sales in the Americas increased 12 percent in Q4 2012 year-over-year, showing a possible recovery, although sales on a yearly level were down slightly.

Global sales in December were $24.7 billion, down three percent sequentially. The Asia-Pacific region did well, with 6.7 percent of growth in December, but Japan and Europe are down by 5.5 and 11.2 percent respectively.

“Despite substantial macroeconomic challenges, the global semiconductor industry outperformed forecasts and posted one of its highest yearly sales totals in 2012,” said SIA President Brian Toohey. “Recent momentum, led by strength in the Americas, has the industry well-positioned for a successful 2013.”

Toohey’s optimism echoes previous projections from research outfit IHS iSuppli, which also expects a rebound in the second and third quarter. However, semiconductor inventory is currently at record levels and sales in the current quarter are set to remain weak.

Evidence of the PC slump is all over the SIA report. Sales of MOS processors are down, along with memory chip sales. However, logic, optoelectornics and NAND sales were up, thanks to strong smartphone and tablet sales.

We’re not sure whether the semi market will hit the $300 billion milestone this year, but the odds at our betting shop around the corner are rather long. 

HDD sales expected to plunge

HHD sales will take a canning this year as SSDs boom, according to beancounters at iSuppli.

iSuppli claims that HDD revenue is set to drop to about $32.7 billion this year, down 11.8 percent from $37.1 billion last year.

HDD revenue will be flat the following year, amounting to $32 billion in 2014, iSuppli said.

HDDs shipments dropped from 659.7 million in 2010 to 626.3 million in 2011 to 578.1 million in 2012.

Fang Zhang, an analyst for storage systems at iSuppli, said that the HDD industry will face lots of challenges in 2013.

Shipments for desktop PCs will slip, while notebook sales are under pressure as consumers continue to spend on smartphones and tablets. The declining price of SSDs will also allow them to take away some share from conventional HDDs, Zhang said.

All that being said, HDDs will continue to be the dominant form of storage this year, especially as demand for Ultrabooks picks up and hard drives remain essential in business computing, Zhang’s report said.

HDDs are still as cheap as chips, particularly when higher densities are involved and dollars per gigabyte are calculated, he said.

He expects the average selling price for HDDs to decline a further seven percent this year.

On average, HDD prices have dropped from 50 cents per gigabyte of capacity in 2007 to 10 cents per gig in 2012, according to Zhang. SSD prices have dropped from $8.79 per gigabyte of capacity in 2007 to $1 in 2012, the report said.

While it is still too early to see the SSD price in 2013, it will be down, Zhang claimed. 

SSD prices continue to fall

The prices for SSD drives have continued to fall and are now a third of what they were in 2010.

According to iSuppli, in 2010 a gigabyte of SSD would set you back $3 and now you can pick up the same space for a buck.

The figures show that the price for SSDs dropped 20 percent in the second quarter of 2012 alone. SSD prices fell another 10 percent in the second half of the year.

Some of the better deals for SSDs are now around 80 to 90 cents for a gigabyte.

Ryan Chien, an IHS SSD and storage analyst said that the main reason for the falling prices was the oversupply of NAND flash memory.

However, prices should be dropping as manufacturing is now more in line with demand and prices have begun to stabilise, Chien said.

Even with the dramatic price drops, SSDs are still seen as niche purchases. He said that HDDs and DRAM are not sexy, but they do far more aftermarket business than SSDs.

Intel and Samsung continue to lead the market, followed by OCZ, Micron and Kingston.

Sales to equipment manufacturers are the biggest market for SSDs, rather than stand alone sales. In that market, the top players are Samsung, Toshiba, Intel, Micron, and Sandisk, Chien said.

He said that the world was seeing the fastest decline in SSD prices in three years, but expects to see prices per drive stabilise and the size of the drives substantially grow over the next few years. 

US companies fail to disclose use of conflict minerals

US electronics companies are failing to to disclose their usage of conflict minerals ahead of the introduction of a federal law – with 90 percent of companies yet to produce the necessary data.

Following a ruling by the Securities and Exchange Commission (SEC) in August, electronic component manufacturers have been told to be more transparent about the sourcing of the materials they use.

The ruling is part of attempts to clamp down on the use of minerals such as tin, tungsten, tantalum and gold, which are mined in regions where armed conflict and human rights abuses take place.One of the most well known is the resource rich Democratic Republic of Congo.

These minerals often end up in components used in all manner of consumer devices, from PCs to smartphones.  However, consumers are generally unaware that revenues eventually make their way up the supply chain into the hands of those controlling the mineral production, effectively supporting human rights atrocities.

As the public outcry against labour conditions in Foxconn factories, used to manufacture Apple products, has shown, there is consumer interest in ethical production.  But many companies have failed to provide clarity about the minerals they source for their components.

Nintendo, for example, was marked in arecent report as one of the worst for investigating its own supply chain.

Authorities in the US are now pushing publicly traded manufacturers to not only disclose the origins of minerals used in production, but to actively investigate their supply chain.

As part of the SEC ruling, they now have 21 months to comply with the legislation. A survey from IHS iSuppli has shown that only a small proportion have made any headway.

Only 11.3 percent of electronics components manufacturers were found to have disclosed conflict mineral information. These companies accounted for just 17.1 percent of the market, meaning that the vast majority of data on the use of conflict minerals is unavailable.

According to Sasha Lezhnev, at the Enough Project, a US group which conducts research in conflict areas such as the DR Congo, believes it is “disingenuous” to say that electronics companies are unprepared to take action against conflict minerals.

Lezhnev says that companies such as Intel and HP have known about the problems surrounding conflict minerals and have taken action to address supply concerns. Apple fully identified all of the smelters in its supply chain in six months, for example.

“It takes some effort, but frankly we’ve seen that it’s not that difficult for companies to do this work,” Lezhnev told TechEye. “So it is time for the laggard companies to stop making excuses and get on with these reforms”.

All in ones set for double digit growth

The traditional desktop PC may be taking a battering from the rise of the mini-machines such as tablets and Ultrabooks, but shipments of all-in-ones are growing rapidly.

An iSuppli report shows that all-in-one shipments are expected to reach 16.4 million units this year, climbing 20 percent from 2011.  Shipments are predicted to eventually climb to 24.8 million units by 2016, a compound annual growth rate of around 13 percent.

This is unlikely to make up for the often abysmal wider PC market as the total figure for growth in traditional PC shipments is set for a meagre 0.2 percent increase.  

While analysts appear confident that the all-in-one market will help support the ailing desktop, even by 2016 it will only make up a small portion of the total 132.3 million units shipped this year.

The situation is markedly worse in the mature markets of  Western Europe, with emerging markets likely the main reason for keeping the overall market afloat.

While it was Apple which was initially responsible for the all in one form factor, many vendors are keen to throw their weight behind the more modern take on the archaic grey box desktops over the decades.

HP launched a range of business and consumer all-in-ones yesterday, while Acer and Lenovo have also released machines recently.

It is likely that the products will also benefit from the touch screen capabilities of Windows 8 too.

Hard drive densities will double in size by 2016

It looks like Seagate’s prediction that the densities of hard disk drives will double by 2016 are proving right, according to IHS iSuppli.

The analyst outfit said that the increase in densities should boost the continued sales of hard drives in data-intensive applications such as video and audio systems.

The technology which is likely to lead the way will be things like heat-assisted magnetic recording (HAMR), which Seagate patented in 2006.

Seagate claims it will have a 60TB 3.5-in. hard drive by 2016 using the technology. But iSuppli thinks laptop drives could reach 10TB to 20TB at the same time.

Areal densities are projected to climb to a maximum 1,800 Gbits per square inch per platter by 2016. In 2011 this figure was a meagre 744 Gbits per square inch.

From 2011 to 2016, the five-year compound annual growth rate for HDD areal densities will be equivalent to 19 percent, IHS iSuppli claimed.

This year it looks like areal densities will reach 780Gbits per square inch per platter, and then rise to 900Gbits per square inch next year.

Fang Zhang, an analyst for storage systems at IHS, said that the rise in areal density will pave the way for continued growth of the hard disk drive industry. 

Rocketing inventory levels ring in New Year for DRAM market

Just when the DRAM has managed to drag itself through a terrible 2011 it seems there are more woes on the way over the next 12 months as inventory levels spiral out of control.

According to a report by IHS, DRAM stockpiles have increased massively in the past few quarters, threatening to hurt already rock bottom chip prices.

Unless by some stroke of luck you happen to be Samsung then times are very hard in the DRAM industry at the moment, with finances largely in the red as firms such as Micron talk of industry consolidation.  Shifting production over to more profitable NAND flash has also been an option in a bid for survival, as even the mobile DRAM market is on shaky ground.

So reports that growing inventory levels are eschewing the downward trend of other areas of the semi industry will elicit more groans from the DRAM industry, if not surprise.

Apparently the IHS iSuppli DRAM Inventory Index of supplier stocks in the third quarter of 2011 saw a 31 percent increase to 12.8 weeks, up from 9.8 weeks in the second quarter.   This means a doubling of the recent low point of 6.1 weeks at the start of 2010, and still way above the long term average 9.2 weeks.  Worryingly analysts reckon that the bulging inventories could continue to rise for a few more quarters.

This means that further pressure is being put on chip prices. Combined with a lack of demand around the world and new devices which call for less DRAM, such as Intel’s Ultrabooks, the outlook continues to look bleak.

The continued popularity of tablets is also knocking sales, and is putting the breaks on consumers upgrading to traditional DRAM-hungry notebooks.

A lack of capital expenditure investments is hurting the move to smaller process technologies –  largely thought to help boost DRAM over the next year or so – though again if you happen to be moneybags Samsung this is less of a problem.

Against the backdrop of this seemingly all-pervasive doom and gloom, analysts have whipped out their calculators and estimated that DRAM revenues fell by more than $6 billion in the final quarter of 2011.  Apparently similar situations have shown that a further downward trajectory is expected, and the “worst is yet to come”.

One small glimmer of hope was offered as inventory levels continue to wrack up is that change to the global economic situation could see the DRAM market swiftly turn around.  Of course, our breath shall not be held for this moment.

As mentioned, the rest of the chip industry is managing to keep inventories more in check.  Instead these declined in the third quarter, putting a halt to increases over the preceding several quarters. This meant a 2.5 decrease from levels seen in the second quarter.

Levels had been on the up since the midst of global financial meltdown in 2009, with manufacturers topping up levels as demand began to pick up again.   But with the semi industry on unsteady grounds in terms of growth recently – for example the SIA announced a drop in sales  – brows are furrowed once again.

The situation is precarious. There are concerns that too much inventory, as is the case with DRAM, leading to lower pricing, while too little stockpiled in the rest of the industry raises worries over a lack of market confidence overall.

Star Wars saves Blu-ray's bacon

It appears that Blu-ray has had its arse saved by a series of well known epic sci-fi flicks, having been in need of a hero for a while now.

According to an IHS iSuppli report, sales of Blu-ray discs have seen a real upturn, restoring hope for the format – at least for a while.

IHS reckons Star Wars has come to the rescue, spearheading a massive 56 percent surge in sales in the US.  Of course you would assume that this refers to the original smash hit trilogy and not the Rasta-offending rubbish that was released later.

So far Blu-ray has failed to truly crack the film market, and there have been fears that it would miss the boat totally due to expectations that the download age is already upon us.

But it seems that the format can at least live up to some of its hype as a string of releases attract greater interest, even if it is down to some retro 70s special effects and lightsabre escapades. 

One analyst remarked that film studios are dusting down old classics to get the Blu-ray treatment now that the public is becoming more receptive, with a generation of nerds waiting to ogle Princess Leia in high definition.

However there is no accounting for taste and it appears that the likes of Thor have also come in to save the day for Blu-ray, with sales on the up of late.

The week of September sawa 131 percent increase in growth thanks to the release of X-Men: First Class, preceded by a 60 percent increase the week before for Rio and others.

This means that the overall market for physical movies went into growth for the week of September 18, not bad considering the market for sales has been on the downturn all year.

Star Wars fanatics unsurprisingly descended upon a new release on September 16, with a total of 400,000 units flying off the shelves in three days.

X-Men: First Class sold 600,000 Blu-ray editions over the course of one week from its release, while Thor and Thor 3D sold half a million in its first week.

High efficency cells could sort solar slump

With the solar market racked by oversupply, one way out of dwindling profits could be improvements to technology creating higher efficiency cells.

A massive oversupply for photovoltaic modules is threatening to cripple the industry with low prices, and this is expected to cause revenues to drop by 10 percent this year.  This drop in revenues is set to continue into the next year, as suppliers engage in a price war.

The industry saw a record $38 billion in revenues but has since been dogged by a failure to cut back on production.  According to IMS Research this will result in a decline to just $30 billion in 2012.

Digitimes reported today that China will be continuing with its expansion plans, which are contributing to the oversupply.

Speaking to TechEye, solar expert at IMS Research, Sam Wilkinson, says: “The frantic pace at which module capacity has been expanded in China is of the key reasons that supply currently far exceeds demand. Ultimately it is the oversupply situation that is driving suppliers into a fierce price battle.” 

In fact gross profits are expected to see a dizzying drop from $10.3 billion in 2010 to around $5 billion in 2012.  This is partly due to suppliers not able to reduce their costs as quickly as prices drop.

It is thought that because global demand is not growing fast enough, with governments in Europe cutting incentive schemes, revenues will not reach 2010 levels for another five years. 

But there is hope that revenues could make improvements from 2013 and there are signs of demand increasing.  In the US market Google recently announced that it would continue its solar plan by setting up a scheme to install solar panels for free in thousands of American homes.  

According to IHS iSuppli a potential solution to the problem of dwindling profit margins could be by increasing prices of cells by upgrading efficiency.

High efficiency cells are expected to more than double market share by 2015, jumping to 31 percent compared to 14 percent now.

Using advanced conversion techniques it will be possible to increase solar from between 0.3 to 5 percentage points.  This is substantial improvement considering that current modules are usually see around 15 percent efficiency.

According to IHS, conversion efficiency will not be a priority over the past couple of years as suppliers have chased higher production to meet a surge in demand.

But with prices slumping, a move to a better product could attract more customers.  Apparently the extra cost which ensues creating the various developing techniques such as 3D cell structures, can mean a 10 to 15 percent mark up on current prices.

With research labs like ECN and Fraunhofer, as well as equipment firms such as Applied Materials and Manz Automation AG, onside IHS reckons the new technology should be viable soon enough.

At the start of 2011 the leading producers of high efficiency cells were said to be Sun Power and Sanyo Electric, though it is expected that many other will begin to roll out their offerings during the course of this year.

But even with the boost that new technologies can bring, the industry faces a struggle to return to the profits of last year.

According to Sam Wilkinson, the answer is far from simple. “The obvious answer to this question is to stabilise and increase prices, and decrease costs – which is obviously not an easy thing to do, particularly in today’s climate,” he told TechEye.

“Suppliers will be looking for new sales channels, emerging markets, developing their brand and trying to promote value added products,” Wilkinson continued.  “We’ve seen suppliers try to control or minimise costs by renegotiating supply contracts or cancelling contracts in order to take advantage of low spot market prices, out-sourcing production or in the long-term moving toward vertical integration models.”

According to Wilkinson, cell efficiency is a way that the solar market can get back to more solid growth. “Efficiency, prices and costs are all a function of each other,” he says. “And it is true that a more efficient module means ‘more watts per module,’ therefore a more powerful module and potentially a higher price.

“Of course, the key concern is whether higher efficiencies can be reached without increasing costs by an amount that negates the price increase. “ 

Analysts slash semi market growth for 2011

IHS has announced tidings of woe in the semiconductor market during the run up to the holiday season, as another economic crisis rears its head.

Expectations for semiconductor revenues have been slashed amidst stagnating financial conditions, teetering on outright turmoil in some parts of Europe, with growth dropping to 2.9 percent.

It had been expected at the start of last month that revenues would grow by 4.6 percent from $304.5 billion in 2010.  But 2011 is predicted to total $313.3 billion for this year.

The market had been performing reasonably well for most of the year but is expected to become more unstable as the holiday period approaches and demand slackens.  Into the start of 2012, growth will be limited to 3.4 percent, analysts reckon, as consumers remain wary of splashing out on electronics.

Driving the lacklustre semi figures is the wider economic situation, with IHS Global slashing global GDP growth from 3.7 percent to 3.0 following a summer of uncertainty.  This is backed by the IMF which has predicted an “anemic” GDP growth of 1.5 percent in developed nations, heralding a “dangerous new phase” for the world economy.

If this is all sounding a little bit like the late summer of 2008 then IHS thinks that would be about right.  The timing of weakening growth in the semi market mirrors that of a sudden drop in the third quarter of 2008.  This led to semi revenues diving by 5.3 percent in 2008 and 11.6 percent in 2009.

In order to prepare for any double dip recession, which IHS gives a 40 percent chance of happening, the semi market is taking “defensive postures” which should prop overall annual growth.

This is echoed by Gartner which says that excess inventory levels are likely to be chopped as a cautious measure.

This is in part due to the recovery following the Japan crisis which led to increasing inventory.

According to IHS, Japan’s recovery will help offer a slight boost to the second half semi market stats.

And while there is plenty of doom and gloom there are certainly areas of the market which have been performing very well.

Clearly smartphone and tablet shipments have been on the up all year.  This means that semiconductor revenue in the wireless segment is expected to jump 16.7 percent for the year.

And despite low expectations, notebooks have managed to grab “mid-single digit growth” according to IHS. 

Semiconductor revenues for wired communications, consumer electronics and automotive electronics are predicted to drop this year overall.

Nascent markets such as NAND Flash, LEDs and other sensors are expected to see some impressive double digit growth.

Unsurprisingly the much maligned DRAM market, which one analyst described to TechEye as “on a suicide mission”, is set to plummet, with an 18 percent revenue drop expected.