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Wordwide Semiconductor sector sales dip and softening of sales predicted for 2016


The Semiconductor Association (SIA) reported recently that the “Worldwide semiconductors sales had slipped somewhat in February 2016, due to normal seasonal trends, customer demand softening, and unfavourable macroeconomic conditions”, said John Neuffer, President and CEO of the Semiconductor Industry Association. “Most regional markets have struggled to overcome these headwinds and sales have dipped across the majority of semiconductor product categories, with the notable exception of microprocessors, which increased year-to-year by 3.4 percent. Global economic headwinds, such as the slowing Chinese economy and the strong dollar, are pushing up the cost of electronic equipment in regions including Western Europe and Japan. This is leading to a reduction in outright sales and also encouraging buyers to shift to lower-cost equipment in these markets.

However, reports from some of the leading semiconductor companies based in the UK and Europe shows evidence of growth. ARM, the world's leading semiconductor intellectual property (IP) supplier recently reported Q1 group revenue growth by 14% year-on-year, due to progression of long-term growth drivers such as the adoption of ARM processor technology in target applications including mobile computing, automotive, networking infrastructure and servers and a growth in the shipments of chips to 4.1 billion, up 10% year-on-year. They predict that macroeconomic uncertainty will remain and could influence consumer and enterprise spending in 2016, potentially impacting semiconductor sales and industry confidence.

Similarly, NXP, the global leader in embedded processing solutions finished Q1 of 2016 with strong performance reporting that the merge of NXP and Freescale was proceeding smoothly having achieved revenues of $2.22 billion, an increase of 52 percent year-on-year, and an increase of 46 percent from the prior quarter. Richard Clemmer, NXP Chief Executive Officer said “On a comparable basis, taking into account previous product line divestitures, the year-on-year revenue trends reflect the semiconductor industry weakness that accelerated throughout the second half of 2015 and affected both NXP and Freescale. Revenue was down by 11 percent year-on-year”. This is likely to be the first time worldwide semiconductor sales have contracted since 2012.

Whilst Dialog Semiconductor the provider of highly integrated power management, AC/DC, power conversion and smart wireless technology reported full year results in March 2016 of $1,355 million, up 17%, though Q4 2015 revenues were down.

Commenting on the trends, Redline Group’s Sales & Marketing Recruitment Manager Sue Cain said “With key industry figures such as Richard Clemmer expecting rough waters for the semiconductor and microelectronics industry as a whole, and with other industry associations such as SIA reporting softening demand in 2016, weakness accelerated throughout the industry in the second half of 2015, and affected companies such as NXP, Freescale and Dialog alike.

Looking ahead a variety of companies are all in transition with Freescale under its wing, NXP now generates nearly half of its revenues from the automotive division, with no other segment coming close.

Intel’s acquisition of Altera and the traction of FPGAs into the data centres looks interesting, whilst they endeavour to cut 12,000 staff worldwide as PC sales collapse. Avago Technologies' $37 billion purchase of Broadcom Corp, Microchip’s purchase of Atmel and not to forget Lam Research and KLA-Tencor’s acquisition all means a large part of the industry is in flux.

All of these scenarios compound the landscape and are not assisted by global headwinds. With an outlook of generally flat sales in both the UK & Europe this will mean further pressure on distributors to hold margins and the drive to upskill the OEM and distribution sales, marketing and applications engineering teams will be important. Companies will be looking to identify key semiconductor jobs, as well as technical sales jobs during 2016 as customers look to increase demand and generate sales growth.”

Adam Walker, Redline Group Director comments on Sue’s long-standing position within Redline’s Sales and Marketing Division: “Sue has worked for Redline Group for 11 years and spent many years prior in the semiconductor component distribution arena latterly with Avnet as Motorola/Freescale Product Manager. Her insight into the semiconductor and component industry is invaluable for clients and candidates as she sits in a privileged position working closely with decision makers in both arenas and thus has the ability to spot market and industry trends very rapidly.”

Redline Group is a specialist Contract & Permanent recruitment consultancy sourcing and selecting professional & qualified Management, Technical and Sales staff for the European technology market. They provide recruitment, retention and management advice and expertise to assist technology companies in identifying and developing the best talent for their organisations. For further information on Redline Group’s Sales and Marketing Division click here.