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Benchmark forecasts 24% growth for IC market

Posted: 13 Apr 2010     Print Version  Bookmark and Share

Keywords:chip market recovery  semiconductor  manufacturing 

In contrast to most industry analysts forecast of overall semiconductor growth of 20 per cent, Benchmark Equity Research analysts believe that the market will garner a growth of 22 to 24 per cent.

The semiconductor industry unit volumes are expected to grow another 15 to 20 per cent to the end of the year, following a sharp recovery in late 2009 and into 2010, according to analysts at Benchmark Equity Research.

Chip unit volumes have improved by more than 75 per cent since reaching a cyclical trough in January 2009, according to a report by Gary Mobley, an analyst at Benchmark. Over the same time period, the Philadelphia Semiconductor Index has rallied by a similar amount, Mobely said.

Inventories for some types of chips—including memories, some analogue and programmable logic chips—increased during Q1 10, but Benchmark said days of chip inventory held in the electronics production supply chain remain below the long-term average. Assuming the global economy continues to slowly improve, monthly IC unit shipments should range between 1.60 crore (16 million) and 1.70 crore (17 million) during the third quarter, up from 80.00 lakh (8 million) units in January 2009, according to Benchmark.

Benchmark continues to recommend that investors invest in semiconductor companies. The firm said its top-rated chip firm buys are MIPS Technologies Inc. and Broadcom Corp.

While many investors believe the rebound in chip sales during the past several months has simply been a function of inventory replenishment by OEMs, electronics manufacturers and chip distributors, Benchmark believes the recent recovery in semiconductor sales is not solely a function of an increase in days of semiconductor inventory held in the production supply chain. "We believe the rebound in semiconductor sales will continue to be a function of a normalisation of electronics goods consumption and inventory," Mobley wrote.

Benchmark cited several trends that the firm expects will drive semiconductor consumption growth, including the development of smart grids, growth of Internet traffic, adoption of solid-state drives, deployment of 4G wireless and continued growth in smart phones and short-range connectivity.

Benchmark also expects industry wide fab utilisation rates to remain stable. After slipping to below 58 per cent in Q1 09, fab utilisation rates improved to89 per cent in Q4 09, Benchmark said. While total capital expenditures for semiconductor manufacturers should rise 40 to 50 per cent in 2010, manufacturing utilisation rates should remain close to the 90 per cent level, according to Benchmark. Considering seasonal sales trends and the amount of production capacity being added, 1H 10 chip manufacturing utilisation rates should be about 85 to 90 per cent, while 2H utilisation may slightly exceed 90 per cent, Benchmark said.

- Dylan McGrath
EE Times

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