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Arete Research makes industry prediction for 2011
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Wednesday, January 26, 2011
What will happen in 2011? Taking parts from various reports, the analysts from Arete Research LLC has listed its predictions for 2011.
The Arete analysts include Brett Simpson, Dan Gardiner, Nam Hyung Kim and Jagadish Iyer. Here's the predictions:
1. Semi smash up
''As consumer, mobile and PC worlds collide, a strategic battle is raging across semis, which could lead to some of the biggest ever structural changes in the landscape:
A) Qualcomm, Broadcom, Marvell and ST-E (will) all begin to target Mediatek's grey market customers in low cost smartphones.
B) Chipmakers shipping Android products rise from four today to 20 in 18 months time.
C) GHz processors pricing falls to <$10 by YE11, with ramp of 28-nm.
D) CSR and Synaptics get acquired this year. CSR's best-in-class Bluetooth and GPS
technology could make it attractive to players such as Intel and Marvell that we believe are looking to boost their wireless portfolios,particularly now that its legal issues with Broadcom have been solved. Synaptics' exposure to the fast growing touchscreen market and modest valuation make it attractive.
E) A raft of infringement claims between Intel and ARM chipmakers/foundries.''
2. Memory: Do not pass go
''The major trend in memory will be the structural shift between memory sub-sectors as growth in NAND flash outstrips DRAM. We expect DRAM to fall 26 percent in '11. We expect NAND to grow 28 percent to $29 billion from $22 billion.
We believe 4Q prices declined 30 percent sequentially and forecast further 29 percent and 12 percent declines in 1Q11 and 2Q11, respectively. From a demand perspective, the key issue will be to what extent consumer spending shifts away from the traditional PC to smartphones/tablets. PC industry growth as usual will be a key swing factor impacting the DRAM market this year.
This trend obviously has a major impact on capex: while DRAM capex drops 40 percent, 85 percent growth in NAND flash capex in '11 should see it surpass DRAM for the first time in the history of memory. Despite this massive increase we are not expecting oversupply this year as three new fabs (Toshiba, IMFS and Samsung) will only reach their full ramp by 1H12. Our view is that oversupply is unlikely before mid-2012.''
3. Capex heats up
''The semicap equipment outlook has improved in the last month. Despite DRAM languishing, record foundry spending and accelerating logic investment should drive 8 percent WFE growth in '11 to $32 billion.
We hope to see this reflected in a turnaround in (fab) orders shortly. Previously, we suggested orders for equipment companies in C1Q11 and C2Q11 will fall 5-10 percent. Given the slew of logic capex announcements, we now think orders are likely to be between -5 percent and +5 percent.''
4. End markets cool
''In PCs and servers, despite Intel's bullish outlook we leave our 10 percent unit growth forecast unchanged and expect the semis PC market to deliver just 5 percent organic revenue growth in '11. Datacenter, corporate PC demand and emerging markets growth will offset a slowdown in government and consumer PCs in developed markets. Datacenter spending should be the fastest growth market in ’11.
Smartphones (and tablet) trends should see wireless outperform the rest of logic semis in ’11, but price competition should limit market growth to 10 percent. Our estimate of 56m tablets (with ASPs of $400) mean this category could amass over $22 billion of retail sales in ’11.
Samsung and LG missed their initial TV forecasts last year as the LED TV price premium of 30-50 percent over CCFL TVs failed to attract consumers. We expect the current dark night to slowly turn into brighter days in 1H11 when LED chip inventory is worked through and new LED TV models are introduced. With LED TV shipments now expected to rise 3x yoy to 102 million units (previously 95 million units), we expect LED chip utilization to recover, particularly with a strong 2H rebound in Korea.''
5. LEDs are hot
''While there is an increasing drive by panel makers to reduce the number of LEDs in an LCD TV by moving from a 4-bar (placed on 4 edges of the panel) to a 2-bar scenario in '11 to reduce cost and minimize the premium between CCFL-based LCD TV and LED TV, we believe larger chip size and increasing LED penetration in low-end TV models should help offset any weakness in the uptake of LED chips this year.
LED chip ASPs have come down 10-15 percent due to a slowdown in NB/TV BLU demand in 4Q10. We now estimate chip ASPs will be down ~30 percent in '11 with the bulk of the decline coming in 1H11 as we expect another step down in chip pricing before we see some stabilization. We have revised up our LED shipment forecast to 102 million units this year from 95 million previously. We expect LED penetration will reach 63 percent by 4Q11 from less than 26 percent in 4Q10.''
6. Too many MOCVD tools
''In '10 we estimate that the industry shipped 245 (MOCVD) tools in excess of demand. As these tools are slowly started up, particularly in China, we remain cautious on new orders. While there is a slight uptick in our estimated demand for MOCVD tools in '11 to 730 tools from 555 MOCVD tools in '10, we see that trending down to 638 tools in '12 as the industry goes through a fall-off in BLU demand, which we believe at this juncture cannot be offset by demand from solid state lighting. We therefore expect very little change (±5 percent) to our '11 MOCVD shipment estimate of 650 tools (-19 percent yoy) as the industry digests these tools.
7. China to cut MOCVD subsidies?
''While recent reports of cutbacks in MOCVD capex subsidies have come to the forefront, we do acknowledge the possibility of local governments in China scaling back or even halting generous MOCVD subsidies in ‘11. We, however, think this will not happen across the board or at the same pace, as funding for MOCVD subsidies comes directly from the budgets of local cities rather than from a federal agency.
Nevertheless, we view this as a looming uncertainty that investors will have to deal with in '11.
8. China (LED) card
''In China, we think pockets of euphoria over investments will last until 1H11 but expect a reality check to set in soon, due to a lack of engineering talent and the poor quality of homemade LED chips. We believe that the ambitious '125 Plan' laid out by the Chinese government will proceed slowly and achieve its target of 70 percent domestically-made chips by 2015. With clouds of uncertainty on MOCVD tools still lingering, including the haziness around Chinese subsidies, we reaffirm our Negative ratings on Aixtron and Veeco, seeing market hopes for continuing growth in China shipments as unfounded.''
By: DocMemory
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