The semiconductor industry is enjoying a "remarkable" recovery from the recession, both in terms of sales volume and revenue, according to IC Insights, a Scottsdale-based market research firm.
The rebound is being driven by relatively strong worldwide sales of personal computers, flat-panel televisions and smart phones plus their higher semiconductor content than previous generations, said Brian Matas, vice president of market research.
"The IC (integrated circuit) industry is not wallowing in a slow, prolonged recovery. Rather, the IC industry recovery is V-shaped and is clearly under way," the firm said in a research bulletin issued this week.
Because of the importance of the semiconductor industry in the East Valley, the sector's rapid improvement is a favorable sign for the local economy.
The situation has turned sharply from the beginning of this year when the industry was in a severe slump, Matas said. Although deliveries of some types of integrated circuits are still down on a year-over-year comparison, the growth in shipments since the beginning of this year has been "explosive," the firm said.
The recovery has been reflected in the stock prices of many semiconductor companies. In the case of two East Valley examples, shares of Intel have risen 63 percent in value since their low in late February, and Microchip Technology shares have jumped 68 percent since January.
On Sept. 8, Microchip upped its prediction for sales in the current quarter to 12 to 14 percent above the previous quarter. In early August the company had predicted 7 to 11 percent growth.
Chief Executive Steve Sanghi said Microchip logged the strongest August bookings in the company's history and therefore was raising its sales prediction for the three-month period.
Sanghi added the recovery is worldwide.
"Geographically, we are seeing strong demand in Asia and the Americas," he said. "Europe is unseasonably strong with revenue in the summer quarter being sequentially up for the first time in several years."
Intel for its part released a statement Aug. 28 raising its third-quarter revenue outlook to $9 billion, about $500 million higher than its previous prediction.
Looking further to the future, IC Insights sees continued growth in semiconductor sales in 2010 and 2011. Also significant is that semiconductor companies have been closing older factories and cutting their manufacturing capacity, which could lead to spot shortages and higher prices in the next few years, the research firm said.
"That's quite a contrast from the calamitous situation that characterized the market only a few months ago," the company said in its research bulletin.
From the viewpoint of consumers, they would be well advised to buy their new PCs, flat-panel TVs or other electronic devices now while prices are down, because that situation might not last, Matas said.
"I don't think prices will escalate dramatically, but the PCs might not have as many features or the huge discounts that they've had in the past," he said.
