On the television show “Home Improvement”, Tim Allen’s character always sought “more power” for whatever project he was working on. The theme of the Applied Power Electronics Conference and Exposition (APEC) 2014 could have been “less power”. APEC 2014 featured five days of seminars and sessions including professional education, technical papers and industry sessions. The conference also featured an exhibit hall with 226 exhibitors. We at Semiconductor Intelligence attended part of APEC 2014 last week in Fort Worth, Texas.
The “less power” theme was reflected in many of the technical and industry sessions. Wide band gap devices (semiconductors using materials such as silicon carbide and gallium nitride) can enable higher performance and less power for applications such as RF, LED lighting, motor drives and electrical power conversion. Energy harvesting captures minute amounts of naturally-occurring energy for many sensing, monitoring and control applications. Smart power grids will help deliver power more efficiently and reliably. Motor drivers and controllers are increasing the power efficiency of motors.
Another theme at APEC was “alternative power.” A track on renewable energy systems featured sessions on photovoltaic and wind energy. Several sessions on solar power emphasized the strong growth in residential photovoltaic panels. Other sessions examined technologies related to alternative energy such as energy storage and DC power transmission. Many of the vehicle power electronics sessions focused on electric drive vehicles.
The exhibition hall occupied most of the Fort Worth Convention Center and covered all aspects of power electronics. All the major power semiconductor companies were represented. The companies with the largest booths were Fairchild, Texas Instruments, STMicroelectronics, International Rectifier and Vishay. Many of the companies on the exhibitor floor emphasized the “less power” theme through applications such as LED lighting and power efficient motor controllers.
APEC 2014 showed the power electronics industry is alive and well, driving new technologies and applications. Remember that none of the electronics devices driving growth in the semiconductor market can work without power.
The fourth quarter 2013 semiconductor market declined 0.8% from the third quarter, according to World Semiconductor Trade Statistics (WSTS). Full year 2013 growth was 4.8%. Our most recent 2013 forecast at Semiconductor Intelligence was 6% in November 2013, based on expectations of positive growth in 4Q 2013. Who had the most accurate forecast for 2013 semiconductor growth? We compared publicly available forecasts for 2013 released in the few months prior to the January 2013 WSTS data release. The most accurate was IDC at 4.9%. Other close forecasts were WSTS and Gartner at 4.5% and Mike Cowan at 5.5%.
Key semiconductor companies reported 4Q 2013 revenue change versus 3Q 2013 ranging from +42% at Micron Technology (driven by revenues from the Elpida acquisition) to -18% at SK Hynix (due to a fab fire). Seven of the fourteen companies in the table below showed revenue growth in 4Q 2013 and seven had declines. Revenue guidance for 1Q 2014 indicates an overall decline in revenue from 4Q 2013. Of the twelve companies which provided guidance, nine expect declines in revenue ranging from -2% from Micron Technology (estimated based on bit growth and price guidance) to -16% from AMD. Toshiba’s semiconductor group, Infineon and Freescale all expect growth in 1Q 2014. The weighted average guidance for 1Q 2014 is a decline of about 5%.
What is the outlook for year 2014 semiconductor market growth? Forecasts in the last few months range from about 4% (WSTS and Mike Cowan) to 20% (Objective Analysis). Half of the forecasts are in the 7% to 9% range. Our latest forecast at Semiconductor Intelligence is 10%. This is down from our November forecast of 15% due to a negative 4Q 2013 and an expected 1Q 2014 decline of about 5%.
Our 10% growth forecast is largely driven by an expectation of accelerating World GDP growth. The International Monetary Fund IMF January outlook calls for World GDP growth of 3.7% in 2014, up from 3.0% in 2013. Acceleration is driven by developed economies, with the U.S. expected to accelerate to 2.8% in 2014 versus 1.9% in 2013. The Euro Area should recover from a 0.4% decline in 2013 to 1.0% growth in 2014. The strongest growth continues to be in emerging and developing economies, growing 5.1% in 2014, up from 4.7% in 2013. Although China is forecast to decelerate slightly from 7.7% to 7.5%, most other developing economies are projected to show accelerating GDP growth in 2014.
Semiconductor Intelligence’s model of the semiconductor market based on GDP for 2014 predicts 11% growth. We are reducing this to 10% based on a weak 1Q 2014. The upside growth in 2014 could be as high as 14%. 2015 GDP growth is forecast by the IMF at 3.9%, a slight acceleration from 2014. Based on this outlook, we expect double-digit growth for the semiconductor market to continue into 2015.
Semiconductor Intelligence attended the International CES last week in Las Vegas, Nevada. A wide variety of consumer electronics devices were displayed at the conference. These ranged from:
- Fascinating – but is it practical? (personal robots, drones)
- Exciting – but when will it be cheap enough for the mass market? (UHD TV, glasses-free 3D TV)
- Potential hit – devices with near term growth prospects (wearable fitness/health devices)
- Mundane – incremental improvements in established devices (tablets, smartphones)
- Questionable – does anyone really want or need this? (Internet control of lights & appliances)
Despite the wealth of new technology introduced, the near term prospects of the consumer electronics market are weak. Steve Koenig, Director of Industry Analysis of the Consumer Electronics Association (CEA) presented the 2014 forecast by CEA and market research company GfK. The presentation is available at: http://www.ce.org/Blog/Articles/2014/January/RESEARCH-What-Do-We-Expect-2014.aspx
CEA & GfK expect the worldwide consumer electronics market to decline 1% in 2014 measured in U.S. dollars. This follows a moderate 3% growth in 2014. The only product categories expected to show any significant growth in 2014 are smartphones (+6% vs. 27% in 2013), tablets (+9% vs. 30% in 2013) and video game consoles (+21% vs. -9% in 2013). Smartphones have been a strong growth category for the last few years, but have led to a decline in non-smart or feature mobile phones. The strong growth of tablets has contributed to a decline in PC sales. Video game console growth in 2014 is due to the introduction of the Sony PlayStation 4 and Microsoft Xbox One in late 2013. Despite the advances in LCD TVs such as Ultra High Definition (UHD or 4K) and glasses-free 3D, overall LCD TVs are expected to decline 2% in 2014 after 3% growth in 2013.
In terms of regions, developed countries (U.S., Western Europe, Japan, South Korea, Taiwan, etc.) are forecast by CEA/GfK to see a 4% decline in consumer electronics sales in 2014 after a 2% decline in 2013. Developing countries (China, India, Latin America, Eastern & Central Europe, Russia, Middle East, Africa, etc.) should grow 2% in 2014, a significant slowing from 9% in 2013. According to CEA, developed countries accounted for 60% of consumer electronics sales in 2010. The percentage is expected to decline to 50% in 2014 and continue to decline in future years.
Two of the emerging consumer electronics devices we focused on at CES were Ultra High Definition (UHD) TV and wearable devices for health and fitness. Although these two categories have potential to drive growth in consumer electronics in the future, what is the near term outlook?
All of the major TV suppliers displayed UHD TVs with screen sizes of 85 inches (diagonally) and up. Several UHD TVs are available on the market. Bestbuy.com lists major brand UHD TVs at about $5,000 for 65 inches and $3,000 for 55 inches. By comparison, HDTVs sell for about $1,500 for 65 inches and $750 for 55 inches. The high prices and limited UHD content will limit sales to early adopters for several years. IHS Inc. expects UHD TV sales to hit 10 million units in 2014, up from 1.5 million in 2013. Sales are forecast to hit 38.5 million units in 2018, but will be only 16% of the total LCD TV market.
Wearable devices should have near term impact on the consumer electronics market. Fitness and health are the major drivers of wearable devices. The 2014 market for wearable devices is expected to be about $5 billion. Forecasts for the 2018 market size range from $13 billion from BI Intelligence to $35 billion from the Industrial Economics and Knowledge Research Center (IEK). Wearable devices are a new area of consumer electronics and should drive growth without displacing sales of other electronic devices.
Our daily blog on CES is at http://www.semiconductorintelligence.com/ces2014