2013 And 2014ís Global Semiconductor Sales and Y-O-Y Sales Growth Expectations Per Cowan LRA Model

2013 And 2014ís Global Semiconductor Sales and Y-O-Y Sales Growth Expectations Per Cowan LRA Model

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Description: The latest update to the Cowan LRA Model's 2013 and 2014 sales and sales growth forecast numbers reveals lower sales growth expectations for both years. Sales growth (yr-o-yr) for 2013 came in at 3.1 percent which is 0.9 percentage points lower than last month's forecast estimate of 4 percent. However, 2014's sales growth forecast came in at 5.7 percent which is only 0.1 percentage point lower compared to last month's prognostication of 5.8 percent.

The latest forecast sales numbers for 2013 and 2014 are $300.7 billion and $317.4 billion, respectively, compared to last month's 2013 and 2014 forecasts of $303.2 billion and $320.6 billion, respectively. These latest updated forecast sales and sales growth numbers reflect June sales results as abstracted from the WSTS's June 2013 HBR which was posted on their website today, 8-08-13.

 
Author: Mike Cowan (Fellow) | Visits: 2136 | Page Views: 2415
Domain:  High Tech Category: Semiconductors Subcategory: Big Picture 
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Short URL: http://electronics.wesrch.com/docxEL1SE1J5ALSED

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Contents:
Latest Update To 2013 And 2014’s Global Semiconductor Sales and Yr-O-Yr Sales Growth Expectations
Per The Cowan LRA Forecasting Model
(Derived From the WSTS's Recently Posted June 2013 Historical Billings Report, HBR)
Date Of Latest Forecast Update: August 8th, 2013

I would like to share with weSRCH readers my monthly update to 2013 and 2014 global semiconductor sales forecast
numbers derived by exercising the Cowan LRA, Linear Regression Analysis, forecasting model on June 2013’s actual
sales ($26.786 billion) as abstracted from the WSTS’s June 2013 HBR, Historical Billings Report, which was recently
posted (8-08-13) on their website. Note that with June 2013’s sales release by the WSTS both the 2Q13 and 1H13 are now
history (closed out) except for any minor revisions that may be published in subsequent months’ HBRs posted by the
WSTS.
The first table shown below provides a high-level summary overview of the model’s latest updated sales and year-overyear sales growth forecast expectations for both 2013 and 2014 on a quarterly, half-year, and full year basis.
COWAN LRA MODEL's 2013 & 2014 GLOBAL SEMI FORECAST EXPECTATIONS
QUARTERLY, 1/2 YEAR, AND FULL YEAR SALES / SALES GROWTH ACTUAL AND FORECAST NUMBERS
FOR 2012, 2013 AND 2014 (UPDATED => 8-08-13)
Time
2 0 1 2 ACTUAL
2 0 1 3 FRCSTED
2013 Yr-O-Yr
2 0 1 4 FRCSTED
2014 Yr-O-Yr
Period
SALES ($B)
SALES ($B)
Sales Growth (%)
SALES ($B)
Sales Growth (%)
1Q
$69.833
$70.449
0.9%
$74.810
6.2%
2Q
1H
3Q
4Q
2H

$73.094
$142.926
$74.430
$74.205
$148.636

$74.645
$145.094
$78.636
$76.954
$155.591

2.1%
1.5%
5.7%
3.7%
4.7%

$78.090
$152.900
$83.486
$81.017
$164.503

4.6%
5.4%
6.2%
5.3%
5.7%

YEAR

$291.562

$300.685

3.1%

$317.403

5.6%

Sources: Cowan LRA Model, WSTS (NOTE: 2012, 1Q13, And 2Q13 Are Actual Sales)

NOTE => ALL ITALICIZED NUMBERs ARE FORECAST ESTIMATEs

The second table (immediately below) summarizes the latest, updated "thinking" of other prognosticators’ sales growth
forecast numbers for 2013 sales and/or sales growth numbers -- ranked from high to low on a year-over-year sales growth
expectation basis.
WHAT VARIOUS FORECASTERS ARE "THINKING" (FORECAST WISE; Ranked from HIGH to LOW)
UPDATED: August 6th, 2013
2013 Yr-O-Yr
FORECAST
2012 SALES
2013 SALES
Sales Growth
DATE,
FORECASTER
(ACTUAL - $B) (FORECAST - $B) (FORECAST - %)
MONTH
Objective Analysis (Jim Handy)
------"As Much As 10%"
6-07-13
BofA Merrill Lynch Global Research
$291.562
$313.756
7.6%
6-28-13
DataBeans
$292.190
$313.041
7.1%
Jan 2013
IDC
------6.9%
7-29-13
Future Horizons (Malcolm Penn)
------6.9%
7-23-13
Semi Intelligence (Bill Jewell)
------6.0%
5-30-13
IC Insights (IC Grwth)
------5.0%
5-29-13
IHS - iSuppli
$304.144
$318.743
4.8%
5-20-13
Gartner
$298.7
$312.1
4.5%
4-17-13
TSMC (Morris Chang, CEO)
------About 4%
April 2013
COWAN LRA MODEL
$291.562
$300.685
3.1%
8-06-13
WSTS / SIA
$291.562
$297.766
2.1%
6-04-13
Value Line Publishing (A. House)
------2.0%
7-05-13
The Information Network
------1.5%
5-14-13
Carnegie Group (Bruce Diesen)
-------1.0%
May 2013
Semico Research
???
???
?????
6-04-13
Sources: Various Market Researchers As Identified

NOTE => ALL ITALICIZED NUMBERS ARE FORECASTS

Note that the latest Cowan LRA Model's sales growth expectation for 2013, derived from the WSTS's just released June
2013 HBR actual sales results, dropped by 0.9 percentage points to 3.1 percent compared to the model’s previous month’s
published 2013 sales growth prediction of 4.0 percent (see last month’s write-up at http://electronics.wesrch.com/paperdetails/docx-EL1SE1J5AVTLZ-updated-global-semiconductor-sales-for-2013-and-2014-per-the-cowan-lra-forecasting-model).

Additionally, with the model extended to forecast numbers for the four quarters of 2014, the first table also provides
updated forecast estimates for next year's quarterly sales and corresponding sales growth forecast estimates. Consequently,
the resulting full year 2014 sales growth expectation relative to the model's just updated full year 2013 sales forecast
estimate of $300.7 billion came in at 5.6 percent which is a very slight downward drop of 0.1 percentage point relative to
last month’s 2014 sales growth forecast of 5.7 percent.
The third table (shown below) displays the model’s forecast evolution of 2013’s month-by-month sales and sales growth
“thinking" for the past twelve months (since September 2012) as well as for 2014 covering the last four months.
MONTHLY EVOLUTION OF COWAN LRA MODEL's GLOBAL SEMI SALES FRCST EXPECTATIONS FOR 2013 & 2014
MONTH Of Sales Data =====>
JULY 2012 AUG 2012 SEPT 2012 OCT 2012
NOV 2012
DEC 2012
Forecast Date
9-10-12
10-10-12
11-07-12
12-10-12
1-09-13
2-07-13
2013 Sales Forecast ($B)
$321.096
$316.237
$307.044
$311.629
$309.244
$302.022
-1.5%
-2.9%
1.5%
-0.8%
-2.3%
SEQUENTIAL PERCENT CHANGE (%)
2012=>13 Sales Growth Frcst Est.
7.7%
7.4%
5.2%
6.4%
5.5%
3.6%
==========================================

MONTH Of Sales Data =====>
Forecast Date
2013 Sales Forecast ($B)
SEQUENTIAL PERCENT CHANGE (%)

2012=>13 Sales Growth Frcst Est.
YTD 2013 Actual Sales Grwth TREND (%)
2014 Sales Forecast ($B)

============ =========== ============ ============

JAN 2013
3-07-13
$310.667
0.46%
6.6%
7.7%

FEB 2013
4-08-13
$303.695
-2.2%
4.2%
1.9%

MAR 2013
5-07-13
$296.310
-2.4%
1.6%
0.9%
$312.397

SEQUENTIAL PERCENT CHANGE (%)

2013=>14 Sales Growth Frcst Est.

5.4%

APR 2013
6-09-13
$300.317
1.4%
3.0%
0.4%
$317.854
1.7%
5.8%

===========

MAY 2013
7-05-13
$303.197
1.0%
4.0%
1.4%
$320.603
0.9%
5.7%

===========

JUN 2013
8-06-13
$300.685
-0.8%

3.1%
1.5%
$317.403
-1.0%

5.6%

SOURCE: Monthly Runs Of Cowan LRA Forecast Model, From Sept. 2012 through August 2013 (Forecast Dates)

One should be reminded that these by-month global semiconductor sales and sales growth forecast estimates are derived
from a purely mathematical model that depends on linear regression analysis techniques operating on the past 29 plus
years of historical, actual sales numbers from 1984 through 2013 YTD, Year To Date, that are gathered and published
monthly by the WSTS (see write up below for an overview summary of the model).
Also in the 3rd table, I would like to draw the reader’s attention to the YTD 2013 Actual Sales Grwth TREND (%) line which
tracks the by-month evolution of the actual cumulative year-over-year sales growth number compared to the
corresponding month of last year’s 2012 YTD sales. As shown this month’s trend has exhibited a strong slowing down
trend with only a 0.1 percentage point increase from last month’s result following a turning point (point of inflection) two
months ago associated with April’s low of 0.4 percent YTD sales growth.
Finally the model is anticipating that next month’s July 2013 actual forecasted sales estimate will come it at $23.562
billion. This corresponds to a 3MMA forecasted sales of $24.887 billion which is normally reported by the SIA.
The Cowan LRA Model’s Semiconductor Forecast – A Succinct Overview of Its Forecasting Methodology
Developed by Mike Cowan (Independent semiconductor industry analyst and market watcher)

A unique and practical global semiconductor sales forecasting model developed by the author facilitates 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 29 years of
historical, monthly actual global semiconductor sales that are collected and published by the World Semiconductor Trade
Statistics (WSTS) organization. It is a dynamic, mathematically pure view of near-term worldwide semiconductor sales
looking forward over the next five to eight quarters.
Since the model is purely mathematically-based, it is devoid of any economic assumptions or emotional biases. It
exploits linear regression analysis operating on the "appropriately transformed" actual monthly semiconductor sales
numbers that are gathered and published by the WSTS. This mathematical transformation of the actual monthly sales
numbers thereby "renders" the global semiconductor sales data highly linear and, therefore, very amenable to linear
regression statistical analysis techniques. The numerical transformation of the past 29 years of monthly actual sales
numbers -- from 1984 through 2012 -- that is invoked is not a complicated mathematical expression but very straight
forward and "makes sense physically," thereby yielding extremely high linear regression correlation coefficients of greater

than 0.97. In exercising this 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
one of the next seven quarters associated with the model's forecast horizon as well as next month’s sales forecast
expectation.
It is emphasized that each month's actual global sales number released by the WSTS (as posted on its website) is a
"lagging indicator" since it is released a full month after the fact, that is, it is backward looking. The Cowan LRA Model,
however, "turns" this lagging monthly sales number into a "leading indicator" by virtue of its near-term forecasting
capability looking out over each of the next seven quarters. This is the "beauty" of the model and, therefore, makes it
dynamic in the sense that it is run each month using the most recent actual global semiconductor sales numbers
published by WSTS via their monthly Historical Billings Report. Thus, it can rigorously "track" the near-term sales forecast
outlook of the global semiconductor industry on an almost real-time basis. Consequently, the model's monthly sales
forecast expectations do not "sit still" but evolve each month since conditions change rapidly and unexpectedly in the
semiconductor industry, and market forecasters are hard pressed to keep up with these monthly 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 dynamic semiconductor market? With the Cowan LRA Model’s forecast results being issued each month, this can,
therefore, help eliminate this very real dilemma.
ABOUT THE AUTHOR

Mike Cowan, the developer of the Cowan LRA Model, is a 48-year semiconductor industry veteran. He enjoyed a 36.5-year career
at IBM's Microelectronics Division in East Fishkill, N.Y., where he was involved in many facets of semiconductor 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 to predict the dynamics of the
semiconductor industry. After retiring from IBM in Jan. 2002 he became an independent semiconductor industry watcher /
analyst, upgraded and perfected his forecasting model and then launched his monthly global semiconductor sales forecast
activities in August 2002. 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. For more information and / or questions regarding
either the model or the results, readers are encouraged to contact the author directly at mikedcowan(at)verizon(dot)net.

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