“Muted” is probably about the best word to describe the expected recovery for semiconductors and electronics.
In a Semi.org blog, analyst Walt Custer of Custer Consulting Group said the normal autumn upturn for electronics is “less robust” than normal. “The muted seasonal recovery is obvious,” he said.
In August, shipments of electronics globally were down 6.4% while September was down 6.1% compared to a year earlier. Custer cited data from U.S. Department of Commerce and other nations. The level of equipment growth in August dropped to zero, he added.
For semiconductors specifically, his comments mirrored other analysts and major manufacturers noting that semis are “turning the corner but still in contraction.” Based on August data, he said, “the rate of contraction has reached bottom, but we are still likely six months away before returning to actual growth.”
For semi equipment shipments, he added, “sales are improving but we are still quite far from the May 1998 peak." In fact, the level of shipments reached about $4.9 billion for an average of the three months ending in August.
Looking across three-month growth rates in August for three sectors, all were negative; semis were down 15.9%, semi capital equipment was down 8.2% and an index called “Purchasing Managers” Index was down by 12.5%. However, that PMI number broke even in September, an indication there’s no contraction in world manufacturing activity.
The gloomiest forecast of all might be from the International Monetary Fund, which downgraded growth in mid-October for all of 2019 to 3%, the slowest pace since the 2008 global financial crisis. “Growth continues to be weakened by rising trade barriers and increasingly geopolitical intentions,” the IMF said. “We estimate that the U.S.-China trade tensions will cumulatively reduce the level of global GDP by 0.8% by 2020.”
Custer summarized by saying, “we are recovering but the path ahead has its challenges…Hang in there. If we can stop shooting ourselves in the foot with trade wars and global infighting, 2020 should be a better year.”