It's been a
record year for the global electronics industry so far. How does the
second half shape up?
If you're an
optimist with one eye on the coming rollout of the iPhone 6, you'd say
excellent. If you were Nils Bohr, you'd say "Prediction is very
difficult, especially if it's about the future."
The market-research house Gartner recently stepped up its bullish early-2014 bullishness, forecasting that worldwide
semiconductor revenue is on pace to reach $336 billion in 2014, a 6.7 percent
increase from 2013. That increase was an upward revision from the company's
previous forecast of 5.4 percent growth. Gartner added that sequential growth
in the second quarter of 2014 was outpacing expectations.
semiconductor-equipment world, the trade group SEMI opined at the huge Semicon
West event earlier this month that the gear market will grow 20.8 percent in
2014 to reach $38.4 billion and to expand another 10.8 percent in 2015 to
exceed $42.6 billion.
driving all this? Memory and mobile.
is once again expected to lead in 2014 with 18.8 percent annual growth, but
other areas are also doing well, including analog, FPGAs, ASICs, and nonoptical
sensors," said Bryan Lewis, Gartner research vice president and longtime
fueling the bulls is the launch of iPhone 6 this fall. Already, leaks suggest that
the company is preparing for a manufacturing run of 70-80 million
units. That compares with an initial run of 50-60 million units last
year for the launch of the iPhone 5s and 5c.
effect around the iPhone 6 launch is expected to add 5-10% growth to the
overall smartphone market by driving up
demand for manufacturing lines.
to memory, ASICs will benefit in the second half-driven by Apple and by a "the
strong ramp of the latest video game console generation, particularly the Sony
PS4 and Microsoft Xbox One," according to Lewis.
however, voice caution. Jim Feldhan, president and founder of Semico Research,
to several factors, notably his Semico IPI (Inflection Point Indicator) Index.
Last fall, he pointed to
the IPI Index to forecast a strong first half of 2014. But, in an
interview recently, he said the IPI declined from May to December 2013, "which
means this industry will experience below-seasonal semiconductor sales in the
second half of 2014."
sees a "significantly lower growth" rate for smartphones in 2014, up 18
percent compared to a growth rate of 41% in the year-ago period. That's because
much of the world's overall mobile-phone sales are in lower cost models, with
tighter margins, fewer features, and less-expensive semiconductors.
that tablet growth is slowing as well and at the same time sales are shifting
to lower cost models. There's an increasing sense that while smartphones are
"needs," tablets are "wants," and, when it comes to functionality, have yet to
surpass the utility of laptops.
are other clouds: The employment firm Challenger, Gray & Christmas reported
this week that through the first half of 2014,
tech-sector employers announced plans to cut payrolls by 48,402, 68 percent
more than the announced layoffs in the first six months of 2013.
The heaviest job cuts (see chart left) in the tech sector occurred among computer
firms, which announced 30,002 planned layoffs (+51%) from January through June,
the company said. Job cuts announced by the electronics industry in the first
six months of 2014 were up 43 percent from a year ago, rising to 5,356 from
So is the glass half full or half empty at the halfway point of
2014? Well, it gets a little more complicated: We may not even agree what glass
we're looking at.
A recent New York Times blog suggested that technology has so
infused itself into society and business that it's difficult to tell what
indicators to rely on anymore-and that's befuddling forecasters. It's a
complex argument, so the blog's worth reading.
But suffice it to say that the electronics industry has evolved
well past the eras in which we could point to the space program, mainframes,
PCs, communications or even mobile phones as broad categories and predict
Either way the cards fall in the coming months, it won't be
boring. And that's a prediction Bohr would probably find hard to argue with.
Industry Headed for Strong 2014: Forecaster