Gartner Semiconductor Briefing - San Jose - June 11, 2009
I had the opportunity to attend Gartner’s Semiconductor Briefing on June 11 here in San Jose (you can see some of the news coming out of this session here and here). It was a good chance to get a sense for where our industry is heading as we find ourselves in the midst of the worst slump since (at least) 2001. I have to admit, going into the 8:30 session, I wasn’t hopeful. If you’ve been following Gartner’s estimates of the semiconductor market, then you know that they have reduced their forecast for the industry the last four times they’ve refreshed their numbers. I settled into my seat and prepared myself to hear more bad news. But you know what. It didn’t (really) come. The bottom line was that Gartner actually has an improved outlook for the industry for the first time in about a year. While good to hear, the real message from Gartner’s outlook on semi’s is that, we’ve got a ways to go – The feeling from them is that things are finally stabilizing (ie bottoming-out) and it is time to lay the ground work for the recovery.
Gartner Semiconductor Briefing - San Jose - June 11, 2009 - Agenda
They broke their half-day session into four key messages: Worldwide Forecast Scenario 2009: Recession, Reset, and Recovery; Recovery Enablers; Recovery Supply; and Recovery Demand. [Are you sensing a theme here?]. The first session obviously set the stage for the later topics, and was meant to reset the industry and provide an updated snapshot as to the current state of the market. So where are we today? This chart sums it up nicely:
Semiconductors: Unprecedented Decline Precedes Bumpy Recovery - Gartner - June 2009
While 2009 will certainly be bad, it’s pretty clear that we’ve hit (or are hitting) bottom at this point. This is good news for everyone as it means there appears to be a light at the end of that very long, unpredictable tunnel. One interesting nugget of information that Peter Middleton relayed during his Semiconductor Industry forecast presentation, was that we may, in fact, get a protracted recovery which gives us a little bump in the short-term, but, takes several years to be fully realized. The reason for this appears to be two-fold. First, governments all over the world have pumped a massive amount of cash into the system as part of the global financial bailout. These dollars will certainly have a short-term impact. However, once these funds are depleted, there is an expectation that these recovery cycles will then become self-sustaining. Will they? Well, that’s anyone’s guess, but it is certainly a risk moving forward. The other reason for the protracted recovery is that, unlike 2001, the semiconductor industry reacted with remarkable speed during this downturn. As a result, many companies may have yanked that chain a little bit too hard. Middleton feels like this initial phase of the recovery (late 2009 and 2010) will be driven in large part by the industry replenishing supply chains to normal levels. This says nothing however for the demand for consumer products into which much of this silicon goes. That demand is not expected to return until much later (2011-2012). The lesson here seems to be that companies should still err on the side of caution when planning for this protracted recovery.
The later morning sessions were focused on strategies for recovery. They focused attention on some of the recovery enablers seen driving growth moving forward. One of the key demand drivers for the recovery that Gartner focused on was the smartphone / mobile internet device / netbook triumvirate. Five of the nine “Recovery” presentations were specifically dedicated to, or heavily referenced these markets. From Gartner’s perspective, it seems clear that these markets, and the technologies and silicon that enable them, will be a major driver for economic recovery in the industry. The one critical factor that seems to be enabling these markets has been the emergence and consumerization of the wireless-accessible internet. Gartner was clear that this “feature” will continue to drive demand and that this will become a must-have characteristic for devices moving forward. This connectivity will obviously lead to more SoC integration of these technologies into smaller packages enabling more devices to utilize the internet as a source of content and data management.
Till next time…
Stephen Tomasello at Sonics, Inc.
http://twitter.com/S_Tomasello
Tags: briefing, economy, Gartner, ic, Industry, recovery, semiconductor, SoC