Latest Cowan LRA Model's Sales Forecast Expectations For 2015, 2016

Latest Cowan LRA Model's Sales Forecast Expectations For 2015, 2016

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Description: The subject paper presents the latest 2015 and 2016 forecast expectations for global semiconductor sales and corresponding yr-over-yr sales growth predictions looking out over the next five quarters, that is, from 4Q 2015 through 4Q 2016. These updated forecast numbers are derived from exercising the Cowan LRA Model employing September 2015ís actual sales numbers gleaned from the recently posted WSTS September 2015 HBR. .

 
Author: Mike Cowan (Fellow) | Visits: 526 | Page Views: 588
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Contents:
September and 3rd Quarter 2015’s Global Semiconductor Sales Data Posted by SIA/WSTS; The Cowan LRA Model
Generates Its Monthly Forecast Update For 2015, 2016 Sales And Sales Growth Expectations
Date of Forecast Write-Up: Nov. 11th, 2015.
Author: Mike Cowan (Independent semiconductor industry watcher and creator of the Cowan LRA Model for forecasting
global semiconductor sales)

The five tables shown below present the latest semiconductor sales forecast numbers and related year-o-year
sales growth expectations. These forecasts are derived from exercising the Cowan LRA forecasting model on the
actual September 2015 global semiconductor sales numbers published by the WSTS which can be found on their
website (posted on November 9th, 2015) at the following URL: http://www.wsts.org/Teaser-Left/Historical-Billings-Report.
TABLE 1. Updated Cowan LRA Model’s Global Semiconductor Sales and Sales Growth Expectations
Time
Period
1Q
2Q
1H
3Q
4Q
2H

2014 (Final)
Sales
$78.445
$82.322
$160.767
$87.699
$87.377
$175.076

2015 Sales
Actuals/Frcst
$83.108
$83.977
$85.232
$86.941
$172.172

2014=>15
Sales Grwth
5.9%
2.0%
3.9%
-2.8%
-0.5%
-1.7%

2016 Sales
Frcst
$84.173
$86.840
$171.013
$93.132
$92.373
$185.504

2015=>16
Sales Grwth
1.3%
3.4%
2.4%
9.3%
6.2%
7.7%

Full Year

$335.843

$339.257

1.0%

$356.518

5.1%

$167.085

Notes - Sales are in $billions; Italicized numbers are Cowan LRA Model generated forecasts.
Sources: WSTS (2014, 1Q, 2Q, 3Q15 Final Sales) & Cowan LRA Forecasting Model, Nov, 2015

TABLE 2. MOST RECENT WSTS (SPRING 2015) FORECAST VS. LATEST COWAN LRA MODEL’s FORECAST
W S T S FORECAST (SPRING 2015):
2014
2015 Est. 2016 Est. 2017 Est.
O/A SALES ($B)
$335.843 $347.248 $358.924 $369.587
Yr-O-Yr Sales Grwth
9.9%
3.4%
3.4%
3.0%

Cowan LRA Model (Nov 2015):
2015 Est.
2016 Est.
$339.257
$356.518
1.0%
5.1%

TABLE 3. MONTHLY EVOLUTION OF THE COWAN LRA MODEL’s GLOBAL
SEMICONDUCTOR SALES & GROWTH EXPECTATIONS FOR 2015 AND 2016
MONTH Of WSTS Sales Data ===>

JAN 2014

FEB 2014

MAR 2014

APR 2014

MAY 2014

DATE Of Forecast Update

3-07-14

4-09-14

5-12-14

6-08-14

7-10-14

JUN 2014
8-07-14

2015 Sales Forecast ($B)

$360.412

$358.231

$345.177

$347.616

$351.125

$349.198

SEQUENTIAL PERCENT CHANGE (%)

----

-0.6%

-3.6%

0.7%

1.0%

-0.5%

2014=>15 Sales Growth Frcst Est.

6.0%

4.7%

4.2%

4.4%

4.6%

4.4%

MONTH Of WSTS Sales Data ===>

JUL 2014

AUG 2014

SEPT 2014

OCT 2014

NOV 2014

DEC 2014

DATE Of Forecast Update

9-08-14

10-09-14

11-09-14

12-08-14

1-10-15

2-10-15

2015 Sales Forecast ($B)

$350.807

$350.689

$347.239

$349.591

$349.574

$350.008

SEQUENTIAL PERCENT CHANGE (%)

0.5%

-0.03%

-1.0%

0.7%

0.00%

0.12%

2014=>15 Sales Growth Frcst Est.

4.6%

4.6%

4.3%

4.2%

4.1%

4.2%

MONTH Of WSTS Sales Data ===>

JAN 2015

FEB 2015

MAR 2015

APR 2015

MAY 2015

JUN 2015

DATE Of Forecast Update

3-12-15

4-12-15

5-14-15

6-10-15

7-13-15

8-11-15

2015 Sales Forecast ($B)

$367.889

$365.360

$351.727

$352.419

$353.745

$347.183

SEQUENTIAL PERCENT CHANGE (%)

5.1%

-0.7%

-3.7%

0.20%

0.38%

-1.9%

2014=>15 Sales Growth Frcst Est.

9.5%

8.8%

4.9%

5.3%

3.4%

MONTH Of WSTS Sales Data ===>

JUL 2015

AUG 2015

DATE Of Forecast Update

9-10-15

10-10-15

4.7%
SEPT 2015
11-10-15

2015 Sales Forecast ($B)

$345.019

$342.721

SEQUENTIAL PERCENT CHANGE (%)

-0.6%

-0.7%

MAY 2015

2014=>15 Sales Growth Frcst Est.

2.7%

2.0%

$339.257
-1.0%
1.0%

MONTH Of WSTS Sales Data ===>

DEC 2014

JAN 2015

FEB 2015

MAR 2015

APR 2015

DATE Of Forecast Update

2-10-15

3-12-15

4-12-15

5-14-15

6-10-15

7-13-15

2016 Sales Forecast ($B)

$371.089

$389.915

$388.951

$370.164

$371.292

$372.880

SEQUENTIAL PERCENT CHANGE (%)

----

5.1%

-0.25%

-4.8%

0.30%

0.43%

2015=>16 Sales Growth Frcst Est.

6.0%

6.0%

6.5%

5.4%

5.4%

MONTH Of WSTS Sales Data ===>

JUN 2015

JUL 2015

AUG 2015

DATE Of Forecast Update

8-11-15

9-10-15

10-10-15

5.2%
SEPT 2015
11-10-15

2016 Sales Forecast ($B)

$365.606

$363.585

$361.244

SEQUENTIAL PERCENT CHANGE (%)

-2.0%

-0.6%

-0.6%

2015=>16 Sales Growth Frcst Est.

5.3%

5.4%

5.4%

$356.518
-1.3%
5.1%

TABLE 4. BY-MONTH EVOLUTION OF THE COWAN LRA MODEL’s MOMENTUM INDICATOR
SEMICONDUCTOR

SALES

WSTS

COWAN LRA MODEL'S

SALES DATA

FORECAST

ACTUAL

MOMENTUM

FOR MONTH OF:

EST. ($B)

SALES ($B)

INDICATOR, MI *

SEPT 2014

$33.503

$31.512

-5.9%

OCT 2014
NOV 2014
DEC 2014
JAN 2015
FEB 2015
MAR 2015
APR 2015
MAY 2015
JUN 2015
JUL 2015
AUG 2015

$27.777
$27.799
$30.051
$25.893
$26.563
$32.853
$26.443
$27.383
$32.213
$27.619
$28.658

$29.018
$28.168
$29.879
$27.234
$26.205
$29.784
$26.903
$27.843
$29.409
$26.510
$27.333

4.5%
1.3%
-0.6%
5.2%
-1.3%
-9.3%
1.7%
1.7%
-8.7%
-4.0%
-4.6%

SEPT 2015
OCT 2015 EST.

$33.997
$28.282

$30.990
TBD

-8.8%
TBD

* NOTE: MI = [(Column #3 – Column #2) / Column #2], that is, the percent
delta between the actual monthly sales and the previous month’s forecasted sales.
TABLE 5. MONTH-BY-MONTH TRACKING OF YTD (Year-To-Date) CUMULATIVE
COMPARISON OF SALES and CORRESPONDING YTD SALES GROWTHS FOR 2014 and 2015

2014 YTD *
SALES ($B)

2013=>14 YTD

(TIME FRAME)

YTD * SALES

2015 YTD *
SALES ($B)

2014=>15 YTD

JANUARY

$25.032

8.2%

9.0%

13.9%

$27.273
$53.347

FEBRUARY YTD

$50.375

MARCH YTD

$78.445

11.3%

$83.108

5.9%

APRIL YTD

$104.040

10.7%

$109.948

5.7%

MAY YTD

$130.864

10.6%

$160.767

10.8%

$137.677
$167.086

5.2%

JUNE YTD
JULY YTD

$188.429

10.5%

$193.595

SALES GRWTH

SALES GRWTH
5.9%

3.9%
2.7%

AUGUST YTD

$216.642

10.4%

$220.869

2.0%

SEPTEMBER YTD
OCT. YTD EST.

$248.466

10.1%

$277.480

10.2%

$252.317
$280.598

1.5%
1.1%

NOVEMBER YTD

$305.964

10.1%

DECEMBER YTD

$335.843

9.9%

* => YTD - Year To Date Cumulative Sales (Source: SIA / WSTS, November 2015)

According to the Cowan LRA Model, October 2015’s global semiconductor sales forecast estimate is expected to
come in at $28.282 billion (see Table 4) thereby resulting in a 3MMA sales forecast estimate of $29.105 billion.
This latter number (3MMA sales) is normally reported by the SIA in its monthly press release (typically one week
prior to the WSTS posting its actual monthly sales numbers). Next month’s October 3MMA sales should be
reported by the SIA during the first week of December, 2015
Mike Cowan – Biographical Sketch
Mike Cowan, an independent semiconductor industry analyst and developer of the Cowan LRA Model for
forecasting global semiconductor sales, is a 50-year semiconductor industry veteran. He enjoyed a 36.5-year
career at IBM Corp.’s Microelectronics Division in East Fishkill, N.Y., where he was involved in many facets of
semiconductor chip development and manufacturing engineering, including both technical and management
responsibilities. Over his last ten years at IBM, as a senior technical staff member, he was involved in strategy

development and competitive analysis activities focused on the semiconductor industry, and developed a wide
range of top-down and bottom-up models for predicting the dynamics of the semiconductor industry. Following
his retirement from IBM in Jan. 2002 he became an independent semiconductor industry market watcher, and
created, upgraded and perfected his semiconductor sales forecasting model. Later in 2002 he launched the
publishing of his monthly global semiconductor sales forecast which he has been doing ever since. Cowan
earned both BS and MS degrees in Physics from Wayne State University in Detroit, Michigan, and an MS in
Electrical Engineering from Syracuse University in New York.

The Cowan LRA Forecasting Model - Abstract
A unique semiconductor sales forecasting model has been developed to facilitate the determination of future
global sales of the semiconductor industry. The Cowan LRA (Linear Regression Analysis) Model, which
forecasts global semiconductor sales, is a mathematically based model that features statistical analysis of the
past 32 years of historical, monthly global semiconductor sales numbers that are routinely collected and
published by the World Semiconductor Trade Statistics (WSTS) organization. The model is a dynamic,
mathematically pure view of near-term worldwide semiconductor sales looking forward over the next eight
quarters. The model is devoid of any economic assumptions or emotional biases. It strictly exploits and relies
on linear regression analysis techniques operating on the "appropriately transformed" actual monthly
semiconductor sales numbers, thereby "rendering" the global semiconductor sales data highly linear and,
therefore, very amenable to linear regression statistical analysis. The numerical transformation of the past 31
years of monthly actual sales numbers - from 1984 through 2014 - that is invoked is not a complicated
mathematical expression but very straight forward and "makes sense physically," yielding extremely high linear
regression correlation coefficients of 0.97 and greater. In exercising the forecasting model each month, a total
of eight distinct sets of linear regression parameters (of the format y = mx + b) are employed to calculate the
resulting global semiconductor sales forecast estimates for each of the next eight quarters associated with the
model's forecast horizon.
It should be emphasized that each month's actual global semiconductor sales number released by the WSTS
is a "lagging indicator" because it is published a full month after the fact. Fortunately the Cowan LRA Model,
however, "turns" this lagging monthly sales result into a "leading indicator" by virtue of its near-term forecasting
capability that looks out over the next eight quarters. This is the "beauty" of the model and, therefore, makes it
dynamic in the sense that it is exercised each month using the most recent actual global S/C sales numbers.
Thus it can rigorously "track" the near-term sales forecast outlook of the global semiconductor industry on a
real-time basis. Consequently, the model's monthly sales forecast does not "sit still" but evolves each month
because conditions change rapidly and unexpectedly in the semiconductor industry, and market forecasters
are hard pressed to keep up with these changes. How can industry management be sure that a forecast
issued two, three or more months ago is still relevant to what's happening in today's market? Following and
tracking the Cowan LRA Model’s monthly forecast results alleviates this uncertainty.



For more information on the Cowan LRA Model the reader is encouraged to see the following two web-based
articles:
1. An Overview Of The Cowan LRA Model For Forecasting Global Semiconductor Sales
Published: Apr 27th 2014
The author presents a descriptive overview of the semiconductor sales forecasting model, called the Cowan LRA
Model, that he has created, developed, and exercised each month over the past ten years in order to predict sales and
corresponding sales growth ...



2. Forecasting Global Semiconductor Sales By Exploiting Linear Regression Analysis (LRA)
Published: May 2nd 2014

The subject Powerpoint presentation provides insight re. the author's "journey" into leveraging linear regression
analysis in developing a global semiconductor sales forecasting model. This invited presentation, as the title page
explains, was ….