Semiconductor Sector
Maintain positive. Global semiconductor sales (GSS) for June 2015 were recorded at US$28 billion (RM108.92 billion).

Despite experiencing a +10.3% year-on-year (y-o-y) growth in June 2014, GSS for June 2015 still managed to expand by +2% y-o-y.

We note, however, that there could be speedbumps in the coming months as the Semiconductor Industry Association commented that “macroeconomic headwinds and softening demand have slowed the global semiconductor market”.

Nonetheless, it was still a record high for the month of June, in terms of sales value. Including the month of June, sales have grown for the past 26 consecutive months since May 2013.

The increase in sales for the month of June was mainly supported by the sales expansion in the Americas and Asia-Pacific regions.

Monthly sales from the Americas region improved by +5.6% y-o-y to US$5.6 billion.

In tandem with the growth of GSS, sales from the Americas have also increased for 26 consecutive months. Sales growth from the Asia-Pacific region for the month of June remained robust at +6.4% y-o-y to US$17.1 billion.

Both the Americas and Asia-Pacific are the two most important regions for sales, making up 80.7% of the June total sales.

Year-to-date, the cumulative sales for the period from January to June 2015 amounted to US$167.7 billion.

This is an increase of +3.9% y-o-y compared with the previous year’s corresponding period. This accounts for 48.3% of the World Semiconductor Trade Statistics’ (WSTS) 2015 full-year estimates of US$347.2 billion.

The growth remains encouraging as it is in tandem with WSTS’ forecast annual sales growth of +3.4% for 2015.

The North America-based manufacturers of semiconductor equipment posted a book-to-bill (BTB) ratio of 0.98 times for the month of June.

This indicates that US$98 worth of orders were received for every US$100 of product billed for the month. Despite the BTB ratio coming in below parity, both bookings and billings are still higher compared with the previous year’s corresponding month.

Semiconductor equipment bookings for the month of June came in at US$1.5 billion. This translates into a growth of +3.5% y-o-y. This is the third consecutive month bookings came in above the US$1.5 billion level since April 2015.

Billings for the month of June 2015 accelerated by +16.2% y-o-y to US$1.54 billion compared with US$1.32 billion recorded in June 2014. This is the second month billings grew by double digits.

Demand for communication devices will continue to be supported by the middle-class consumers seeking to stay connected and to be at the forefront of cutting-edge technology.

This will be in favour of electronic companies which are able to offer the end-product at a competitive price, thus advocating a high volume business strategy.

Semiconductor companies that positioned themselves in the right production value chain will in turn benefit from the high volume orders.

In the near term, the new smartphones line-up in 2H15 is going to further excite the industry. For instance, Samsung will be unveiling the Galaxy Note 5 and S6 Edge Plus on Aug 13.

Given the high correlation between the semiconductor industry and the global economy, we are expecting uninterrupted growth in the semiconductor industry for as long as the global economy continues to grow. — MIDF Research, Aug 6

This article first appeared in digitaledge Daily, on August 7, 2015.