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Bottom hit in Q1, 5% growth for Q2 expected, IC Insights reports

Semiconductor industry watchers are reporting increasingly optimistic views for Q2, with the second market researcher this week forecasting sales growth for the June quarter.

IC Insights today in its May update to The McClean Report said there is evidence that a cyclical bottom was reached in Q1 and that Q2 will show sales growth for many major industry players.

IC Insights looked at Q2 guidances from 48 semiconductor suppliers and its estimates for 13 of its ranked top 25 companies, for a total of 61 companies considered. Not including the five pure-play foundries, the remaining 56 companies in the research represent about 75% of the worldwide semiconductor market, IC Insights said.

"It was very enlightening and encouraging to read the comments from many of the companies in the survey," IC Insights said in its report. "When reviewed, words and phrases like 'stabilizing, improvement, bottom, expansion, inflection point, and better than expected' came up often and lend credence to our opinion that a turning point has been encountered in the semiconductor industry. Over the next few months, it will be refreshing to hear the discussion regarding the semiconductor market shift focus from, 'where is the bottom?' to 'how strong will the recovery be?'"

According to the company's research, the top 25 semiconductor suppliers are expected to display an 8% quarter-over-quarter increase in Q2 sales, or a 4% increase excluding the foundries.

Guidance from the non-top 25 semiconductor suppliers in its survey was even more encouraging, IC Insights reported. In total, 36 "other" companies have guided for a 13% quarter-over-quarter averaged increase in Q2 sales, IC Insights said.

The averaged total estimated growth of the 61 companies looked at in the survey shows a 9% sequential increase in semiconductor sales expected for Q2. Excluding the pure-play foundries, the Q2 over Q1 sales growth rate drops to 5%, IC Insights noted, reminding that that estimate compares to the Q1 2009 over Q4 2008 12% decline and Q4 over Q3 23% decline.

IC Insights further noted that when a range of expectations was given by a company for its Q2 outlook, the researcher incorporated the mid-point of this range. Pointing out that a range of expectations was given by about 90% of the companies surveyed, IC Insights said that historically most companies are conservative in their stated expectations. Given that, IC Insights forecasted that the Q2 will show a sequential growth rate of more than 5%.

The statements from IC Insights this afternoon follow on a report fromGartner Inc Thursday in which the market research company bettered its expectations for all of 2009. In a revision to its full-year estimate, Gartner said it now expects a 22.4% decline in sales. While representing less than a 2% improvement from Gartner's February estimates, the change is significant as it moves industry projections away from worst-case scenarios. In the report, Gartner estimated 4.9% semiconductor industry sales growth for Q2.

 

 
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