This is a continuation of my coverage of the fortunes of the global semiconductor industry. I would like to acknowledge and thank Mike Cowan, an independent semiconductor analyst and developer of the Cowan LRA model, who has provided me the latest numbers.
Mike routinely tracks how the Cowan LRA Model sales growth forecast (each month) compares to a wide range of major semiconductor industry market watchers in order to monitor how the model's latest monthly update result "stacks up" against the competition, that is, 15 other prognosticators he routinely monitors.
Table 1 summarizes the latest sales growth forecast expectations of these 15 other semiconductor industry forecasters, thus comparing Cowan's forecast number to the rest of the crowd.Source: Cowan's LRA model.
Cowan routinely updates his forecast numbers each month immediately following the WSTS release of its monthly actual sales numbers in order to "dynamically" predict the industry's sales posture. Consequently, the sales and sales growth output of the monthly model run does NOT "sit still" as highlighted below:
Cowan LRA model for forecasting global semicon sales --– 'divining' (mathematically) future from past
* It should be emphasized that each month’s actual global sales number published by the WSTS is a "lagging indicator" since it is released a full month after the fact.
* The Cowan LRA Model, however, "turns" this lagging actual monthly sales into a "leading indicator" by virtue of its near-term forecasting capability looking out over the next five quarters.
* This is the "beauty" of the model and, therefore, makes it dynamic in the sense that it can be run each month utilizing the most recent actual global semiconductor sales number published by the WSTS. Thus, it allows “rigorous tracking” of the near-term sales forecast outlook for the global semiconductor industry on an “almost” real-time basis.
* Consequently, the model’s monthly sales forecast does not “sit still” but “evolves” with each succeeding month’s latest published sales number. Since conditions change rapidly and unexpectedly in the semiconductor industry, industry market forecasters are hard pressed to keep up with these changes. How can the industry management be sure that a sales forecast issued two, three, or more months ago is still valid and relevant to what's happening in today’s global semiconductor market?
In order to illustrate this "does not sit still" principal embedded in the monthly update to my forecasting approach, here is a graphic showing the month-to-month evolution of year 2010 sales and sales growth forecast estimates as determined by the model from January to the present.Source: Cowan's LRA model.
Global semicon market set for slowdown
Before I conclude, here's a wonderful piece of information sent to me (and to several others) by Dr. Robert Castellano of The Information Network. Two months ago, I had done a post with Dr. Castellano where he'd maintained that the global semicon market is set for slowdown.
The Information Network had, on September 21,issued a release similar to the report I had done with Dr. Castellano to all of its readers. This was at a time when the semiconductor market was humming along and many 'analysts' continued to up the ante in the market.
It seems that nobody believed them! Well, maybe not nobody, but few (including yours truly!). Fast forward another month and The Information Network reiterates the slowdown. Dr. Castellano says, "This time, we have a lot of company and it's somewhat vindicating."
Dr. Castellano had actually pointed out problems in the DRAM sector. "Isn't it interesting that Nanya and Inotera both reported losses for 3Q10. Again vindication for being slapped around by managers and shareholders in denial," he added.
Dr. Castellano notes: "I also pointed out that we would be seeing problems in the semiconductor equipment market, particularly lithography. Isn't it interesting that ASML went out of its way in its conference call that they were not seeing any pushouts in purchases. Interesting that ASML never bought our lithography report in the 25 years we are in business. It reminds me of when I pointed out last year that Intel was losing money on the Atom, and every conference call after that they said they were making money on the Atom (maybe Monopoly Money!), yet Intel never purchased our report on ARM versus Atom (ARM did!)."
The question now is: Has the Internet really become such a marketing tool that multibillion dollar sized companies want to save a few thousand dollars and only read headlines instead of buying insightful marketing reports? Or maybe they are just buying from the wrong market research firms.
Or well, are such companies even able to really 'understand' what's actually happening in the industry?
PS: Hope that most of you have also read that SEMI's latest North American semiconductor equipment industry Sept. 2010 book-to-bill ratio is 1.03, which is 11 percent lower than August 2010.