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November 19, 2006
Wafer area vs. IC sales
(c) copyright, View from Silicon Valley, 2006. All rights
reserved.
We love it when readers argue with our point of view. It
is a condition we do not take lightly. Since industry-published data is used to support our opinions and those
who disagree, a complaint typically causes us to go back to the numbers to try and tease out the root of the issue.
Few things provoke the intensity of disagreement received when
we compared SIA dollar sales to SEMI's wafer area shipped. People who make their living selling conclusions
(or "spin"?) based on this data used various epithets and sarcastic insults to malign our intelligence, impugn
our integrity and even question our ability to walk and chew gum at the same time.
In short-- we love it! The worst insult is to be ignored.
We would rather be dis-liked than ig-nored. Even so, we would also rather be right. So far, we haven't seen much
in the way of proof to the contrary.
Without further ado, let's poke another stick in the beehive of
SIA and SEMI statistics. A table running the last six years of SIA sales "actuals" vs. six years of wafer
shipments is now on the web site.
Could it just be a coincidence that the times when
wafer area grew faster than dollar sales, industry profitability, and stock prices, were weak?
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SIA |
|
SIA$-Area |
| Qtr |
Total |
y-o-y |
Tot($M) |
y-o-y |
y-o-y |
| 03Q1 |
1,175 |
16.2% |
36.90 |
14.6% |
-1.6% |
| 02Q4 |
1,134 |
29.2% |
37.58 |
23.1% |
-6.1% |
| 02Q3 |
1,263 |
53.3% |
36.87 |
20.6% |
-32.6% |
| 02Q2 |
1,273 |
28.8% |
34.06 |
-1.6% |
-30.5% |
| 02Q1 |
1,011 |
-19.1% |
32.20 |
-25.5% |
-6.4% |
| 01Q4 |
878 |
-39.4% |
30.54 |
-43.1% |
-3.7% |
| 01Q3 |
824 |
-43.4% |
30.56 |
-44.7% |
-1.3% |
| 01Q2 |
988 |
-28.0% |
34.62 |
-31.1% |
-3.0% |
| 01Q1 |
1,250 |
-1.9% |
43.24 |
-4.4% |
-2.5% |
In turn, sales growing faster than wafer area tended to show increasing
profits and stock prices.
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|
SIA |
|
SIA$-Area |
| Qtr |
Total |
y-o-y |
Tot($M) |
y-o-y |
y-o-y |
| 04Q2 |
1,619 |
27.2% |
53.51 |
40.5% |
13.3% |
| 04Q1 |
1,529 |
30.1% |
48.86 |
32.4% |
2.3% |
| 03Q4 |
1,392 |
22.8% |
48.10 |
28.0% |
5.2% |
| 03Q3 |
1,307 |
3.5% |
43.33 |
17.5% |
14.0% |
| 03Q2 |
1,273 |
0.0% |
38.09 |
11.8% |
11.8% |
This general rule seemed to apply over the six years for which
data is available, except over the last four quarters:
|
|
|
SIA |
|
SIA$-Area |
| Qtr |
Total |
y-o-y |
Tot($M) |
y-o-y |
y-o-y |
| 06Q3 |
2,075 |
18.7% |
64.11 |
9.3% |
-9.4% |
| 06Q2 |
1,966 |
22.4% |
59.34 |
10.2% |
-12.3% |
| 06Q1 |
1,884 |
28.6% |
59.10 |
7.3% |
-21.3% |
| 05Q4 |
1,826 |
22.9% |
59.86 |
8.6% |
-14.2% |
You can clearly see percentage wafer area growth far exceeds the dollar increase
in semiconductor sales since the fourth quarter of 2005.
Is our whole concept flawed? Can wafer area grow faster than IC dollar
sales? Indefinitely? With no ramifications for profitability? Or stock prices?
Are the last four quarters of 20% wafer area growth vs. only ~9% sales
growth just temporary? Are IC sales about to skyrocket and "catch up" with wafer area shipments?
Or is the stock market in a blow-off with no grounding in value? Can indexes
composed of semiconductor and semiconductor equipment stocks just keep going up and up, even while the underlying
supply and demand balance becomes worse and worse?
Conclusion:
Please don't be shy. We look forward to hearing what we are missing. Besides,
of course, previous comments that wafer area vs. SIA dollar sales just does not matter.
Just "because" was a good answer when you were four or five, but it won't wash
here. There is too much money at stake.
* * * * *
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.
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