The semiconductor market surges as booming sales of cars, smartphones, and tablets drive sales to new highs.
Bishop tracks 13 companies in the semiconductor market sector. Growth in the semiconductor market, as measured by these 13 companies, was strong in 2013. For the full year, the market grew 5.7% over 2012. Trends in the global semiconductor market were driven in 2013 by the automotive, smartphone, wireless infrastructure, and tablet markets. Market growth, as tracked by Bishop, closely mirrors the market as tracked by the Semiconductor Industry Association, which reported a sales increase of 4.8% in 2013 to $305.6 billion.
According to the Semiconductor Industry Association [see its article Five Things to Know About Semiconductor Sales], the industry saw strong demand in several product segments during 2013. Logic was the largest semiconductor category by sales, reaching $85.9 billion in 2013, with memory at $67.0 billion and MOS micro-ICs at $58.7 billion rounding out the top three segments in terms of sales revenue. Memory was the fastest-growing segment, while optoelectronics and analog were also strong. Sales trends for Europe and Japan are moving in the right direction, indicating that 2014 could be a stronger year for both regions. Although semiconductor sales in Q3 are often stronger than Q4, sales in the Americas grew by 4.5% in Q4, defying seasonal trends.
Bishop follows electronic interconnects sales trends in 13 markets. The combined annual revenue of all the market sectors was $4.2 trillion in 2013 and grew 0.8% over 2012. Of the 13 market sectors, semiconductor was the second-fastest-growing market sector in 2012, at 5.7% year over year with combined revenues of $140.4 billion. Profitability was $25 billion at 17.8% of sales, which was an increase of 58.1% over 2012, when sales contracted 2.1%.
Hynix grew 46.3% in 2013 on the strength of its DRAM products and wireless communication systems. 4Q13 sales were down 18%, due to a fab fire.
For 2013, Micron Technology had the second-largest growth at 41.4% year over year. The growth is credited to its DRAM business through the acquisition of Elpida and its growing NAND flash products.
Microchip Technology’s sales were up 25.3% year over year. In the last calendar quarter, its 16-bit and 32-bit microcontroller net sales were up 27.9% and 29.5%, respectively.
Renesas sales declined 19.4% year over year in 2013. Renesas results were negatively affected by the Japanese economy and by the downturn in the Japanese automotive industry.
The following table shows the results for the 13 companies we track in this market sector.
As shown in the following chart, year-over-year sales have grown in each of the last three quarters after sales declined in the previous six quarters. Year over year, fourth quarter 2013 sales increased 11.9%.
The semiconductor industry and the connector industry tend to follow each other very closely, with semiconductors leading connectors by two to four months. This can be seen in the following chart.
For 2013, semiconductors were up 4.8% year over year, while connectors were up 2.7%. The results on a regional basis show the same connections. The following table displays year-to-date performance by geographic region for both components.
While semiconductors outperformed connectors in North America, connectors led in Europe. Asia and Japan were very close in performance for both products.
Trends in the Semiconductor and Interconnect Industries
- Semiconductor sales presage interconnect sales. A strong semiconductor market bodes well for the interconnect market.
- While some of the traditional semiconductor companies have been hurt by the decline in sales of the PC industry, many semiconductor companies have benefitted from the sale of smartphones and portable wireless devices such as tablets. There are not, however, as many opportunities for cable assemblies in these new devices. The use of I/O cable assemblies in electronics is diminishing, as many devices are adopting wireless connectivity.
- Semiconductors and interconnects are used across many market sectors and products. As the economies of the world grow stronger, particularly the United States and Europe, both products will benefit from the economic growth.
Bishop & Associates projects the worldwide market for cable assemblies to grow 6.7% in 2014 to $133.7 billion. Semiconductor sales are projected to grow in the range of 7% to 10% for the year, putting the industry sales in the $326 billion to $336 billion range.
Dave Pheteplace, VP, Bishop & Associates, Inc.
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