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U.S. PMI data for July 2012 stays flat at 49.8 from 49.7 in June 2012, this is indicative of a wider global malaise that is mirrored by not only other regional PMI index’s but also the results of major Semiconductor vendors. Lack of manufacturing capacity for key components coupled with the lack of investment in new fab space mean that this problem is likely to continue for a number of months and will eventually limit the availability of key flagship mobile products. This has been a major issue for Qualcomm; due to lack of availability of its S4 smartphone platform solutions it has been unable to satisfy customer demand.
“There is a lack of semiconductor manufacturing capacity, as highlighted by Qualcomm’s recent troubles” said Peter Cooney, practice director, semiconductors, “There is a general industry sentiment that there is a lack of predictability in orders with many last minute orders being made rather than definite long-term future order planning; therefore, internal and external fab capacity is not increasing as suppliers play it safe.”
ABI Research’s Worldwide Semiconductor Market Tracker shows that global semiconductor growth has also seen signs of an overall fall. 4Q11 revenues fell to US$71 billion, after being relatively stable at between US$76.5 billion and US$79.5 billion from 3Q10. 1Q12 and 2Q12 revenues were relatively flat and an overall market decline is expected for 2012 of up to 5 percent.
As inventories are burnt and order books become less predictable, the ability to bounce quickly on any upturn will be limited. Upcoming debt ceiling decisions in the U.S., U.S. presidential elections, the Euro debt crisis, and the lack of availability of credit facilities are likely to create a situation whereby manufacturing and semiconductor production are squeezed through the end of 2012 and into the middle of 2013 at the very least.
Stuart Carlaw, Chief Research Officer, added that, “Semiconductor suppliers continue to try to cut to profitability, hoard cash, and explore limited M&A strategies to buy volume in markets where cash in the bank is worth more to investors than long term product strategy. Any upswing in consumer appetite for spending is unlikely to be met by a supply chain that will be very thin by the middle of next year.”
These findings are part of ABI Research’s Mobile Device Semiconductors Research Service which includes additional Competitive Analyses, Vendor Matrices, Market Data, and Insights.
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