Semiconductor Market for Data Processing: Asia/Pacific, 3Q03

Transcription

1 Research Brief Semiconductor Market for Data Processing: Asia/Pacific, 3Q03 Abstract: Semiconductor market conditions have improved since the second quarter of 2003, and the industry's recovery is continuing. Positive signals have enabled us to increase our forecast for By Ben Lee Recommendations The global economy started to rally in the second half of Suppliers should be prepared for a true recovery in IT spending in the next two years. Electronics manufacturers in the Asia/Pacific region must continue to focus on operational efficiency, from design through fulfillment, to sustain their competitiveness in the world. In light of the lengthening upgrade cycle, suppliers must focus product development on creating features that stimulate demand. Publication Date:18 December 2003

2 2 Semiconductor Market for Data Processing: Asia/Pacific, 3Q03 Asia/Pacific Semiconductor Market for Data Processing Applications U.S. market conditions of the past few months confirm that the economic recovery is continuing. Gartner Dataquest expects that improvement will continue through Fueled by a reviving U.S. economy, global economic recovery likely began in the second half of Meanwhile, global IT spending will increase soon after the economic upturn and will boost the global demand for data processing applications. The semiconductor market amplifies the trend as increased capacity utilization provides underlying pricing support. Data processing is the largest semiconductor application market in the world, accounting for more than 42.3 percent of the total global semiconductor market in 2003, and will continue to drive the momentum of worldwide semiconductor demand through Asia/Pacific, the largest semiconductor market for data processing applications among all regions, is expected to gain share from other regions in the next few years. Gartner Dataquest predicts that Asia/Pacific will have a 42.1 percent share of the global semiconductor market for data processing applications in The industry is cautiously optimistic for seasonal strength in demand, and several positive signals have enabled us to raise our forecast guidance for 2003 and the succeeding years. We are forecasting the semiconductor market for data processing applications in Asia/Pacific to grow at a compound annual growth rate (CAGR) of 11.2 percent for the next five years, above our previous forecast of 9.1 percent, as shown in Table 1. Table 1 Semiconductor Market for Data Processing Applications, Worldwide and Asia/Pacific Forecasts (Millions of U.S. Dollars) CAGR (%) Worldwide DP SAM (Forecast in 3Q03) 65,754 73,645 89, ,381 93,426 99, Worldwide DP SAM (Forecast in 1Q03) 65,541 68,677 83, ,036 92,394 94, Asia/Pacific DP SAM (Forecast in 3Q03) 27,006 31,025 37,848 44,907 42,235 45, Asia/Pacific DP SAM (Forecast in 1Q03) 27,912 30,352 39,293 47,034 43,437 43, DP SAM = Data processing semiconductor application market Source: Gartner Dataquest (December 2003) The semiconductor market for data processing applications in Asia/Pacific is expected to grow by 14.9 percent this year to reach $31 billion, far above our previous forecast of 8.8 percent growth in This market also represented about 42.1 percent of the global semiconductor market for data processing applications in Electronic production orders continue moving into this region from the world, boosting the growth of 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 18 December 2003

3 3 production for data processing electronics in Asia/Pacific. We are forecasting the semiconductor market for data processing applications in Asia/Pacific to grow 22 percent and represent 42.3 percent of the global semiconductor market for data processing applications in The desktop PC is the largest application for semiconductors in the world, although the demand for PCs has reached its saturation in the past few years. Desktop PCs are losing market share to notebook PCs. Gartner Dataquest's forecast of production growth for notebook PCs has been adjusted higher through We estimate that the market met our expectations for the second quarter. However, a review of market trends and the performance of individual representative companies indicates that the growth rate in the second half of 2003 and in 2004 will be stronger than previously expected. Gartner Dataquest remains optimistic about the prospects for strong growth in 2004 and The forecast profile factors in a supply-side-driven downturn in 2006 and the beginning of the next industry upcycle in The industry's lack of capital spending on capacity in the past two to three years is finally beginning to impact the outlook on the supply side, suggesting stability in device pricing and longer device lead times. We believe that a combination of pent-up demand and underinvestment in fab capacity will likely spur semiconductor unit shipment growth and stabilize device pricing next year. PC Unit Production Review Notebook PCs Surge PCs, comprising desktop PCs and notebook PCs, will account for more than 51.5 percent of the global semiconductor market for data processing in Asia/Pacific dominates the production of desktop PC motherboards and notebook PC subsystems, which are the core parts of desktop PCs and notebook PCs. In 2003, Asia/Pacific produced 89.7 percent of the world's desktop PC motherboards and 76.7 percent of the world's notebook PC subsystems. The sharp upturn in the world PC market in the third quarter significantly exceeded our previous forecast expectations. The application market for PCs, including the home market as well as the small and midsize business, education, and government segments of the professional market, also posted stronger-than-expected results during the quarter. Desktop PCs gained moderately, while mobile PC growth was robust across all regions. Table 2 shows our new, higher, forecast for PC unit production in An upside surprise is possible next year, based on our analysis of replacement cycles in the professional and home market. Upgrades will be another driving force to boost the growth of global PC shipments in Gartner, Inc. and/or its Affiliates. All Rights Reserved. 18 December 2003

4 4 Semiconductor Market for Data Processing: Asia/Pacific, 3Q03 Table 2 PC Unit Production, Worldwide and Asia/Pacific Forecasts CAGR (%) Worldwide Desktop PCs 117, , , , , , Asia/Pacific Desktop PCs (CPU and Memory) 21,135 22,237 23,953 25,346 26,975 28, Asia/Pacific Desktop PC Motherboards 103, , , , , , Worldwide Notebook PCs 30,164 36,509 43,544 49,961 55,507 61, Asia/Pacific Notebook PCs (CPU and Memory) 3,506 4,740 6,000 7,680 9,639 11, Asia/Pacific Notebook PC Subsystems 22,942 27,975 33,830 39,491 43,875 48, CPU = Central processing unit Source: Gartner Dataquest (December 2003) Microsoft introduced its Windows XP Media Center PC Edition on 30 September 2003 and will terminate its support for Windows 98/Windows 98 SE on 16 January This OS upgrade will be one of the most influential drivers in Still, these cycles could all too easily be disrupted by an unfavorable move in PC prices or a turn for the worse in the global economy. Although we're optimistic about the growth in 2004, we will still see some inhibitors on component prices and supply constraint issues, which threaten to increase average selling prices and, in turn, crimp demand. Prices for liquid crystal displays (LCDs) and dynamic random-access memory (DRAM) have been firm lately and could increase if rising demand runs up against looming supply bottlenecks. Besides, the possibility of mobile hard disk drive shortages in the face of strong mobile demand is rising. Stronger-than-expected second-quarter results have caused Gartner Dataquest to increase its 2003 PC unit shipment growth forecast from 7.2 percent to 8.3 percent. Absolute numbers have been raised as a result of Gartner Dataquest revising its numbers to fully include white-box and self-assembled machines. Disk Drive Unit Production Review Slightly More Optimistic Compared with the scenarios published in March 2003, Gartner Dataquest has slightly increased the disk drive unit production forecasts from 2003 through 2007, as shown in Table 3. The hard disk drive and optical disk drive industries are expected to increase shipments by more than 11 percent and 12.1 percent on an annual basis in 2003, boding well for double-digit shipment increases in 2004 and beyond. The growth of global disk drive production in 2003 will depend on the recovery of the traditional PC and storage systems markets, in conjunction with substantial increases in new non-pc markets. Traditional PCs will still be the largest application for disk drives, while some emerging application markets, such as game consoles, digital video recorders and car navigation systems, will spur further growth during the forecast period Gartner, Inc. and/or its Affiliates. All Rights Reserved. 18 December 2003

5 5 Table 3 Disk Drive Unit Production, Worldwide and Asia/Pacific Forecasts CAGR (%) Worldwide Rigid Disk Drives 219, , , , , , Asia/Pacific Rigid Disk Drives 200, , , , , , Worldwide Optical Disk Drives 174, , , , , , Asia/Pacific Optical Disk Drives 146, , , , , , Source: Gartner Dataquest (December 2003) Gartner Dataquest Perspective Driven by global economic growth, Gartner Dataquest predicts that the Asia/Pacific semiconductor market for data processing will register 14.9 percent annual growth in 2003, the first double-digit growth since With stronger PC demand in the following years, the Asia/Pacific semiconductor market for data processing will accelerate its annual growth to 22 percent in 2004 and then decelerate in 2005 and The CAGR from 2002 through 2007 will be 11.2 percent. Asia/Pacific will be a global manufacturing base for data processing electronics through the forecast period and will dominate the supply chain of worldwide data processing electronics industries. Key Issue What is the semiconductor market forecast for Asia/Pacific? 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. 18 December 2003

6 6 Semiconductor Market for Data Processing: Asia/Pacific, 3Q03 This document has been published to the following Marketplace codes: SEMC-WW-DP-0366 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice