2015/16 Semiconductor Sales, Growth Expectations; Per Cowan LRA Forecast Model

2015/16 Semiconductor Sales, Growth Expectations; Per Cowan LRA Forecast Model

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Description: The subject paper presents the latest 2015 and 2016 forecast expectations for global semiconductor sales and corresponding year-over-year sales growth predictions looking out over the next six quarters, that is, through the fourth quarter of 2016. These updated forecast results are derived from exercising the Cowan LRA forecast model using July 2015's actual sales numbers which are abstracted from the just posted (Sept. 9th, 2015) WSTS’s July 2015 HBR, Historical Billing Report, which can be found at the WSTS website (URL = http://www.wsts.org/).

 
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Contents:
July 2015 Global Semiconductor Sales Data Posted by SIA/WSTS; The Cowan LRA Model Generates Its
Monthly Update For 2015, 2016 Sales And Sales Growth Expectations
Date of Write-Up: Sept. 10th, 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 associated year-oyear sales growth expectations. These forecast results are derived from the Cowan LRA forecasting model
operating on the actual July 2015 global semiconductor sales numbers published by the WSTS which can be
found on their website (posted on September 9th, 2015) at the following URL: http://www.wsts.org/TeaserLeft/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
$167.085
$89.403
$88.531
$177.934

2014=>15
Sales Grwth
5.9%
2.0%
3.9%
1.9%
1.3%
1.6%

2016 Sales
Frcst
$85.700
$88.415
$174.114
$96.032
$93.439
$189.471

2015=>16
Sales Grwth
3.1%
5.3%
4.2%
7.4%
5.5%
6.5%

Full Year

$335.843

$345.019

2.7%

$363.585

5.4%

Notes - Sales are in $billions; Italicized numbers are Cowan LRA Model generated forecasts.
Sources: WSTS (2014, 1Q15, 2Q15 Final Sales) & Cowan LRA Forecasting Model, Sept, 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.
O/A SALES ($B)
$335.843 $347.248 $358.924
Yr-O-Yr Sales Grwth
9.9%
3.4%
3.4%

2017 Est.
$369.587
3.0%

Cowan LRA Model:
2015 Est. 2016 Est.
$345.019 $363.585
2.7%
5.4%

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

JUL 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

9-10-15
$345.019

SEQUENTIAL PERCENT CHANGE (% )

5.1%

-0.7%

-3.7%

0.20%

0.38%

-1.9%

-0.6%

2014=>15 Sales Growth Frcst Est.

9.5%

8.8%

4.7%

4.9%

5.3%

3.4%

2.7%

MONTH Of WSTS Sales Data ===>

DEC 2014

JAN 2015

FEB 2015

MAR 2015

APR 2015

MAY 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

5.1%

-0.2%

-4.8%

0.30%

0.43%

2015=>16 Sales Growth Frcst Est.

6.0%

6.0%

6.5%

5.2%

5.4%

5.4%

MONTH Of WSTS Sales Data ===>

JUN 2015

JUL 2015

AUG 2015

DATE Of Forecast Update

8-11-15

2016 Sales Forecast ($B)

$365.606

9-10-15
$363.585

SEQUENTIAL PERCENT CHANGE (% )

SEQUENTIAL PERCENT CHANGE (% )

-2.0%

-0.6%

2015=>16 Sales Growth Frcst Est.

5.3%

5.4%

TABLE 4. BY-MONTH EVOLUTION OF THE COWAN LRA MODEL’s MOMENTUM INDICATOR
SEMICONDUCTOR
SALES
SALES
FORECAST
DATA FOR:
EST. ($B)

WSTS
ACTUAL
SALES ($B)

COWAN LRA MODEL'S
MOMENTUM
INDICATOR, MI *

4.4%
-0.2%
-5.9%
4.5%
1.3%
-0.6%
5.2%
-1.3%
-9.3%
1.7%
1.7%
-8.7%
-4.0%
TBD

JUL 2014

$26.447

$27.600

AUG 2014
SEPT 2014

$27.807
$33.503
$27.777

$27.760
$31.512
$29.018

$27.799
$30.051

$28.168
$29.879

MAR 2015
APR 2015
MAY 2015
JUN 2015

$25.893
$26.563
$32.853
$26.443
$27.383
$32.213

$27.234
$26.205
$29.784
$26.903
$27.843
$29.409

JUL 2015
AUG 2015 Est.

$27.619
$28.658

$26.510
TBD

OCT 2014
NOV 2014
DEC 2014
JAN 2015
FEB 2015

* 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
SALES and CORRESPONDING YTD SALES GROWTHS FOR 2014 and 2015

YTD * SALES

2013=>14 YTD

(TIME FRAME)

2014 YTD *
SALES ($B)

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%

JUNE YTD

10.8%

$137.677
$167.086

5.2%

$160.767

JULY YTD

$188.429

$193.595

2.7%

AUGUST YTD EST.

$216.642

10.5%
10.4%

$222.253

2.6%

SEPTEMBER YTD

$248.466

10.1%

OCTOBER YTD

$277.480

10.2%

NOVEMBER YTD

$305.964

10.1%

DECEMBER YTD

$335.843

9.9%

SALES GRWTH

SALES GRWTH
5.9%

3.9%

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

According to the Cowan LRA Model August 2015’s global semiconductor sales forecast estimate is predicted to
come in at $28.658 billion (see Table 4) which would result in a 3MMA sales forecast estimate of $28.192 billion.
This latter number (3MMA sales) is normally reported by the SIA in a monthly press release (typically one week
prior to the WSTS posting its actual monthly sales numbers). Next month’s August 3MMA sales will be reported
during the first week of October, 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 31 years of historical, monthly global semiconductor sales numbers that are 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
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 ….