NEW YORK (
) -- The semiconductor industry has undergone seven major cycles since the 1970s, triggered by various factors including worldwide recession, overcapacity and inventory burn. Cycles aren't necessarily all bad. Downturns represent an opportunity for new entrants -- few firms have managed to penetrate the entry barriers during an upturn -- while upturns allow incumbents to garner profits from earlier investments.
In addition to these major cycles, there have been numerous minicycles. According to World Semiconductor Trade Statistics, memory devices fared the worst in 2008, dropping 19.8% to sales of $46.4 billion. In 2010, memory devices from companies such as
are forecast to grow the most of all sectors of semiconductors by 18.8% to $50.9 billion.
Conversely, logic devices from companies such as
Advanced Micro Devices
exhibited the greatest growth in 2008, increasing 9.3% to sales of $73.5 billion. In 2010, this sector is forecast to grow the least, only 4.4% to $65.5 billion from $62.8 billion in 2009.
Another minicycle is a downturn in the first quarter of each year. In the past 25 years we have witnessed 15 negative sales growth occurrences vs. 10 positive periods of sales growth. Also, over the last 10 years, negative sequential sales growth from the fourth quarter to the first quarter has occurred in seven out of 10 years, according to the Cowan LRA Chip Sales Forecast Model.
According to our analysis, which is based on a comparison of our proprietary leading indicators, which look out four to six months, and semiconductor sales, we see no downturn in the first quarter of 2010.
The V-shape of the semiconductor and leading indicator curves substantiates the World Semiconductor Trade Statistics forecast of 12.2% growth for 2010.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.