After a dreary 2019, economic conditions for chips and semiconductor capital equipment could improve in early 2020, according to one industry analyst who blogs for the SEMI trade group.
“Global politics and trade fights could certainly interfere, but we appear to be inching forward,” wrote Walt Custer of Custer Consulting Group in a blog on Monday.
Custer based his muted optimism largely on a significant upturn in August in Taiwan-based foundry sales, which are often a leading indicator of global semiconductor shipments. Based on financial data from Taiwan companies and industry reports for August, Custer said Taiwan wafer foundry shipment revenues jumped to nearly $39 billion in August up from about $25 billion in July based on a three-month average.
“Semi equipment and semiconductors will likely be led by foundry sales, reinforcing the prediction of a resumption in semiconductor chip and capital equipment growth in late 2019 or early 2020,” Custer said. The growth rate in shipments from Taiwan foundries appears to be about 1.2% in recent weeks.
The World Semiconductor Trade Statistics group previously predicted a 13.3% sales decline for semiconductor sales for all of 2019, followed by a 4.8% rebound in 2020. For July, chips and capital equipment shipments shrank by nearly 15%.
While chips and semi equipment have taken a big hit in 2019, Custer reported that electronic equipment sales declined just 1.4 % in the second quarter for major manufacturers in a 213-company sample. They include makers of PCs and cell phones. August sales for this group were down by 5%, which means the normally busy year-end holiday season sales appear to be “a bit muted.” While Custer’s report should offer chip makers some hope, CNBC reported Friday that two-thirds of U.S. chief financial officers in a survey of 62 CFOs think U.S. trade policy will be negative for their businesses over the next six months.
Concerns about a looming recession and the trade war will be complicated by concerns over an attack on the Saudi oil supply and spiking oil prices. On Monday, markets fell on the oil news and a GM strike.