The first quarter of 2019 will be even weaker, states Semiconductor Intelligence, which reviews semiconductor forecasts each year and compares them to the final WSTS data.
Most major semiconductor companies are expecting up to double digit declines in 1Q 2019 from 4Q 2018. The exceptions are Qualcomm which expects a 0.9% increase (with 9.3% at the high end) and Infineon, which sees a flat 1Q 2019.
Weak end demand and inventory adjustments are cited as key factors in the declines.
Memory companies are the hardest hit, with Samsung down 24.3% in 4Q 2018 and SK Hynix down 13.0%. Micron just reported a 26.3% revenue decline in its fiscal quarter ended February 28, 2019. Micron’s outlook for the quarter ending May 31 is a 17.7% decline.
The global economic outlook for 2019 points to slower growth. The International Monetary Fund (IMF) January 2019 forecast is for world GDP growth to slow from 3.7% in 2018 to 3.5% in 2019.
The decline is led by the advanced economies, with the U.S. slowing from 2.9% in 2018 to 2.5% in 2019 and the Euro area slowing from 1.8% to 1.6%. China is expected to drag down growth in the emerging/developing economies as its GDP growth decelerates from 6.6% in 2018 to 6.2% in 2019.
Key factors cited by the IMF for the slowdown are trade tensions (especially between the U.S. and China) and the uncertainty of Brexit. The outlook for 2020 shows slight improvement, with acceleration to 3.6% world GDP growth led by emerging/developing economies.
The outlook for key end equipment is also bleak. IDC in March forecast a 0.8% decline in smartphone unit shipments in 2019 and a 3.3% decline in combined PC and tablet unit shipments.
Recent 2019 semiconductor market forecasts are generally negative. The latest projection from Semiconductor Intelligence is a 10% decline. Several forecasts are in the -5% to -1% range. While Gartner projects a 2.6% gain for semiconductors.
Memory is the weakest link in 2019. IC Insights projects the IC market will decline 9% in 2019, but will be flat excluding memory. WSTS expects 2.6% growth for semiconductor excluding memory. Our Semiconductor Intelligence forecast is for a 2% decline in semiconductor without memory.
The current outlook for the semiconductor industry for 2019 assumes lower memory prices, slower electronic equipment demand, inventory corrections, and slower growth for the global economy. Despite all the uncertainty, few analysts expect a global recession in 2019. The expectations for the 2020 semiconductor market are for a moderate rebound. VLSI Research and Gartner forecast growth in 2020 of 7.0% and 8.1% respectively. And the preliminary 2020 forecast from Semiconductor Intelligence is 5% to 10% growth.
