Tuesday, December 20, 2011

2012's semicon sales and sales growth estimates $325.5 billion and 6.9 percent

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.

We are into the back end of 2011 with just two more months of global semi sales numbers yet to be announced (by WSTS) in order to “wrap up” and finalize year 2011's official, overall semi sales result and the corresponding final sales growth compared to last year “cast in concrete.”

Various industry watchers' sales growth forecast expectations for 2011 are presently ranging from low positive single digits to low negative single digits including the latest Cowan LRA Model's sales growth forecast estimate of 2.1 percent based upon WSTS's October 2011 sales results published at the beginning of December.

Therefore, the soon to be released -- expected on or about Jan. 5th, 2012 -- November sales number in conjunction with exercising the Cowan LRA Model's "look ahead" analysis capability can shed more insight into 2011's final expected sales and sales growth forecast estimates as well as updated 2012 forecast numbers.

Consequently, the "look ahead" scenario analysis summary table shown immediately below nets out the “look-ahead” analysis derived high-level forecast expectations. A write-up providing the details is appended below.Source: Cowan LRA model, USA.

Analysis of global semicon industry
It’s that time of the month again; namely, time for a “preview” of next month’s global semiconductor sales forecast updates for both 2011 and 2012 as gleamed by exercising the “look ahead” forecasting capability of the Cowan LRA forecast model “operating on” November’s ‘actual’ sales expectation range.

The soon to-be-announced November 2011 global semiconductor sales result should be relevant in determining the forecasted sales growth expectation for the full year of 2011. In particular, one can ascertain whether 2011 will exhibit positive yearly sales growth for the industry or will it turn negative as a number of market researchers have recently forecasted based upon downward fourth quarter sales guidance updates recently announced by many semiconductor suppliers.

Presented below is a ‘snap shot’ of 2011′s global semiconductor sales and sales growth forecast prospects as a function of November’s possible ‘actual’ sales forecast estimate range derived via the Cowan LRA forecasting model that I have developed. Moreover, the model has been extended to include a view of what 2012’s sales growth prospects might look like, thereby providing a five quarter look ahead horizon that allows the model to capture the four quarters of 2012. It should be mentioned that November 2011′s ‘actual’ global semiconductor sales number is scheduled to be released by the WSTS (via its monthly HBR, Historical Billings Report) on or about Thursday, January 5th, 2012.Source: Cowan LRA model.

In advance of the WSTS’s release of its November HBR, Cowan has shared his monthly ‘what if’ outlook analysis. This analysis leverages the Cowan LRA forecasting model which projects worldwide semiconductor sales for 2011 (as well as 2012) by providing a ‘look ahead’ scenario for year 2011′s sales forecast range as a function of November’s assumed range of ‘actual’ global semiconductor sales estimates.

The output of this ‘look ahead’ modeling analysis is detailed in the scenario analysis matrix displayed in the table below. A discussion of the model’s results is provided in the paragraphs immediately following the table.

The results!
In order to facilitate the determination of these ‘look ahead’ forecast numbers, an extended range in assumed November 2011′s ‘actual’ sales is selected a-priori. In this month’s scenario analysis outlook, a Nov. 2011 sales range from a low of $23.195 billion to a high of $27.445 billion, in increments of $0.250 billion, is pre-selected as listed in the first column of the above table.

This best-guess, ‘what if’ estimated range in assumed ‘actual’ sales numbers is selected around November’s actual sales forecast expectation of $25.695 billion as gleamed from last month’s Cowan LRA Model run (based upon October’s WSTS published ‘actual’ sales number). The corresponding November 3MMA sales forecast estimate expectation is projected to be $26.182 billion. (NOTE – this assumes no, or very minor, revisions to either September’s or October’s previously published “actual” sales numbers as released in last month’s HBR by the WSTS).

The overall year 2011 sales forecast estimate corresponding to each one of these pre-selected November sales numbers over the full range of “actual” sales estimates is calculated by the model, and is exhibited in the second column of the table. The third column lists the associated year-over-year sales growth estimates for 2011 compared to year 2010′s global semiconductor sales of $298.315 billion, as reported by WSTS.

The fourth and fifth columns show the corresponding November 3MMA, three Month Moving Average, sales forecast estimates and the associated 3MMA year-over-year sales growths relative to November 2010′s 3MMA sales of $25.927 billion, respectively. The sixth column lists the model’s Momentum Indicator, MI defined as the percentage delta between the actual November sales result and the previous month’s (December) sales forecast estimate for November.

Finally, the seventh and eighth columns reveal 2012′s forecasted sales and sales growth estimates associated with last month’s November sales forecast estimate expectation, respectively.

Sales varying between $301.9-$306.6 billion for 2011!
Therefore, as the above ‘what if’ scenario analysis table lays out, depending on the actual WSTS (to-be-released) November 2011 global semi sales number, the forecasted full year 2011 sales estimate as determined by the model could vary between a minimum of $301.9 billion and a maximum of $306.6 billion.

Thus, the corresponding 2010 to 2011 sales growth forecast estimate would then vary between a low of 1.2 percent and a high of 2.8 percent, respectively. Moreover, the table also reveals the model’s expectations for 2012′s sales and sales growth forecast estimates, namely $325.5 billion and 6.9 percent, respectively.

Consequently, as gleamed from the above described ‘look ahead’ analysis capability, the model is capable of generating a sensitivity output of the “expected” year 2011 sales range (and a year-on-year sales growth range) as a function of the yet-to-be-announced (but, in this case, assumed) November 2011 ‘actual’ sales number.

Therefore, using this scenario analysis outlook table, one can select an anticipated November sales number (in the pre-selected range shown) and immediately see what the model would predict for year 2011′s sales forecast estimate along with its corresponding sales growth expectation well in advance of the actual (to-be-published) November 2011′s sales result.

Finally, stay tuned for the WSTS to post its November 2011 HBR (anticipated on or about January 5th, 2012) and thus the ‘actual’ sales number. Once released, the reader can then easily “zero in” on the model’s latest forecast results as abstracted (or extrapolated) from the provided table (above) even before the Cowan LRA forecasting model is put through its paces.Source: Cowan LRA model, USA.

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