IHS Markit Already Forecast That 2019 Would Decline

The headline in this insight will not come as a surprise to many that have been closely watching the industry. In June 2019, IHS Markit, in both its annual report and quarterly report, forecast a decline, but only -0.3%. At the time, given the small amount of the decline, and the margin for error, it couldn’t be said for certain that the revenue would decline.

However, now it can be said almost for certain that the revenue of 2019 will decline vs 2018.


Quarterly Analysis

Q2 was a disappointing quarter with some companies reporting slightly below expectation. The first half of 2019 may be as much as 10% below the first half of 2018, although this will not be confirmed until the publication of the next quarterly report until September. Further, recent company earnings calls and conversations with suppliers in the last few weeks suggest there will be no significant recovery in Q3. In addition, the economic outlook has weakened again, for example the Dow Jones index dropped 3% on August 14th amid fears of a recession.

Therefore, the 2019 revenue will be lower than 2018, and perhaps about 5%-9% lower.


Not All Results Are In Yet

Several major suppliers have neither reported results nor spoken to us within the current quarter (since July 1st). Therefore, this is a provisional finding to provide an interim update. The data published in June should still be used for analysis as this has not been updated yet. However, the 2019 forecast is now on the high side of the possibilities.


Long Term Outlook May Change Also

Increasingly, there is now an established trend that the LED market is no longer a growth market. Recent conversations suggest further evidence that there is no market coming to increase revenue substantially in the next 5 years. Therefore, it’s possible that the 2020-2024 forecast will also be reduced in the next update in the second half of September.