Semiconductor Looks in the Near Future

Published:2011/12/27 1:12:00 Author:Phyllis From:SeekIC

According to some research analysts of CIMB Research, the short-term future for semiconductor is not bright despite recent signs of improvement in the US economy. The semiconductor demand is not going to recover until the second half of 2012. The first half of 2012 will be exceedingly weak because of a fragile global economic recovery and seasonal factors.

Considering factors such as uncertain demand recovery, concerns over consumer spending, deteriorating external environment and the current investor aversion to cyclicals, the research house maintained its underweight rating on the industry.

Another research firm, RHB Research Institute, noted that uncertainty in the global economy continued to affect consumer and corporate spending. Although recent retail data from the United States suggested improving consumer spending, RHB Research said it preferred to remain cautious until stronger demand indicators were seen.

Kenanga Research said it’s rating on the technology sector is quite neutral though it believes that there was a glimmer of hope for recovery. According to the company, the current upcycle has just started to show potential signs of recovery since the industry has always been cyclical.

As semiconductor foundries were starting to encroach upon the territory of packaging and assembly players by offering more assembly services, the recovery was also expected to be anaemic amidst a more competitive environment. Also, some of the larger packaging and assembly companies are moving into the low-pin count and lower-end packages.

The financial numbers for semiconductor companies Malaysian Pacific Industries Bhd (MPI) and Unisem (M) Bhd were not expected to improve in the near term. The realignment of shipments to demand is not expected to end until the second half of 2012. There is softness in the personal computer (PC) segment. RHB Research said the near-term outlook remained bleak for MPI and Unisem.

Another reason that could affect consumer spending in the region was China’s slowdown in economic growth.

The World Semiconductor Trade Statistics has forecast global semiconductor sales this year to surpass the US$300bil (RM946.5bil) mark for the first time. Last year, it grew 31.8% year-on-year to a record-breaking US$298.3bil (RM941bil), compared with US$226.3bil (RM714bil) in 2009. The World Semiconductor Trade Statistics is predicting a healthier 2.6% growth for 2012 and 5.8% growth for 2013.

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