November 11, 2006
The real "news" from SIA...
(c) copyright, View from Silicon Valley, 2006. All rights reserved.
Part of our self-defined role at View from Silicon Valley is consolidating Silicon Valley-related news and statistics. At
risk of blowing our own horn, no other web site aggregates local technology, population, housing and jobs data
in one place. Thanks to our loyal readers, we seem to have pretty good niche.
One area we expanded into a few months ago was tracking monthly SIA (Semiconductor
Industry Association) numbers. SIA puts out a headline the first of every month explaining how their three-month
sales average is up or, when it's down, why it's only seasonal.
(We changed the format today, hoping it may be more useful than
in the past...)
While working out how to change the format, we took time out to study
the actual information. As often happens, we found some real "news" in the underlying numbers,.
There is no dispute SIA's numbers are indeed growing:
Global($M) y-o-y
2000 204.4
2001 140.0 -29.5%
2002 140.7 +0.5%
2003 166.4 +18.3%
2004 213.0 +28.0%
2005 227.5 +6.8%
2006* 243.4 +15.9%
* run-rate thru September, 2006
Any way you slice it, this is not too bad! The y-o-y experience
is solid, not to mention SIA sales now project to be +19.1% higher than the peak of the dot-com boom!! (Let's just
overlook 19.1% across six years is less than 3% CAGR.)
As regular readers already anticipate, we like to dig a little
deeper.
It's all well and good if sales in China or India or
Vietnam are growing consistently. But here in Silicon Valley we tend to depend on US-based sales for our daily
bread. Those numbers tell a somewhat different story:
Americas($M) y-o-y
2000 64.1
2001 35.8 -44.1%
2002 31.3 -12.6%
2003 32.3 +3.2%
2004 58.7 +81.7%
2005 40.7 -30.7%
2006* 44.7 +9.8%
If you're a semiconductor engineer, marketing or sales person,
assuming you dodged being out-sourced and/or off-shored, your Americas-based customers are buying -23.9% less than in 2004 and -30.2% less
than at the peak of the boom.
Just for fun, let's compare this with two other regions:
Europe($M) y-o-y
Japan($M) y-o-y
2000 42.3 46.7
2001 30.2 -28.6% 33.1 -29.1%
2002 27.8 -7.9% 30.5
-2.6%
2003 32.3 +16.2%
38.9 +27.5%
2004 39.4 +22.0% 45.8
+17.7%
2005 39.3 -0.3% 44.1
-3.7%
2006* 39.2 -0.3% 46.5 +3.2%
Wow! Europe is only -7.3% from
their 2000 peak and Japan is only -0.4%!
But aren't the Europeans too conservative, and their companies
too bloated, to generate sales growth? Haven't the Japanese been in recession, and even deflation, during the last six
years? Weren't companies in both of these areas supposedly doomed because of their high regulatory and headcount
burdens?
Yet despite these huge handicaps, European and Japanese companies
recovered far more of their 2000-peak semiconductor sales than the supposedly cutting-edge, ruthless cost-slashing and employee-RIF'ing(*)
firms in North America!
Conclusion:
The above data suggests companies in the "Americas" are "cutting
edge" only in their financial engineering. "Americas" companies willingness to sacrifice local employees and
facilities has, for now, prevented their stock prices from cratering. The next couple years will reveal if they ahead
of their time or just preserving executive pay packages ahead of their employees.
Alert readers will quickly deduce well over 100% of the growth
since 2000 was in Asia-Pacific. (Actual score since 2000: SIA: +19.1%, or +$39M, Asia-Pacific: +120.5%, or +$61.8M.)
Not that anyone would ever know it from the rosy SIA headlines,
but if you depend on US semiconductor sales, it's been a loooong six years!
*=
HR acronym for Reduction In Force.
* * *
* *
The above is not intended
as advice to buy, sell or hold any stock, bond, real estate nor any other financial
product or service. Invest at your own risk.
