2014 semiconductor revenues will increase over 7 percent

PHOENIX, USA: For nearly a year, Semico's IPI index has been indicating that the fundamental demand in the second half of 2014 would be seasonally weak.

Back in early 2013, Semico's initial view for 2014 was a 10 percent market growth. However, as the IPI declined in the second half of 2013 we revised our semiconductor revenue forecast down to 7.37 percent, heeding the warning that was projected by the Semico IPI index.

In addition to the IPI's warning signal for the second half of 2014, Semico's forecast incorporated lower growth rates for tablets and smartphones as compared to 2013. When looking at the new features provided by tablet and smartphone manufacturers, it appeared that there were no compelling new features to drive strong growth.

As part of the normal pattern, Semico expected consumers to take a wait-and-see attitude just before new models were released. Many consumers have postponed their purchases this year, waiting to see what Apple and

Samsung would offer. Of course, some consumers needed to upgrade due to loss, breakage or just because their phone was aging.

Macroeconomic variables such as continued weakness in the overall economy and instability in the Middle East also added fuel to the downgrade. These factors were the primary drivers that compelled Semico to re-evaluate its 10 percent growth forecast and lower it to 7.37 percent.

Evaluating these types of economic realities is what Semico's IPI Index is best at. Through various economic inputs, we're able to predictably forecast out market ups and downs four to five quarters in advance.

Every month we discuss our forecast in our IPI report. Semico looks at a variety of factors to forecast out the semiconductor market. And once a quarter we provide an in-depth look at the market, giving detailed forecasts for Discretes, Analog, Optoelectronics, Memory, Etc.

This month, the topics in the IPI report included:

* IPI indicates semiconductor sales up 3.9 percent in third quarter 2014,

* The economy: Choppy waters,

* Connecting vehicles to IoT,

* Are older fabs still relevant?,

* How rising design costs impact SoC design starts,

* Shipments, orders, and inventories.

The IPI index, which increased during the first half of 2013, accurately predicted strong semiconductor sales in the first half of 2014. However, the IPI declined from May to December 2013, which means this industry will experience below seasonal semiconductor sales in the second half of 2014.