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Semiconductor revenue shows decline in 2012

Posted: 28 Aug 2012     Print Version  Bookmark and Share

Keywords:semiconductor market  chip revenue  PC 

IHS downgrades its global semiconductor market chip revenue forecast for 2012 based on weakening economic conditions that are spurring reduced demand for PCs and related electronic components.

Global semiconductor revenue now is expected to decline slightly for the year, contracting by 0.1 per cent, according to preliminary results from the IHS iSuppli Application Market Forecast Tool. The previous IHS forecast called for marginal growth of less than 3 per cent. This will mark the first annual decline for the global semiconductor industry since 2009.

"The expected decline in 2012 represents a major event for the global semiconductor market," said Dale Ford, senior director at IHS. "Throughout all of 2011, even though electronics markets were very weak, IHS never projected revenue to decline for the entire year. However, the disappointing results in the second quarter and weak third-quarter expectations driven by poor economic conditions are expected to cause the semiconductor market to retreat this year."

The attached figure presents the preliminary IHS annual semiconductor forecast.

Semiconductor revenue forecast

Global semiconductor revenue dropped modestly by 3.6 per cent in the first quarter of 2012 compared to the fourth quarter of 2011, IHS said, reflecting normal seasonal patterns.

However, revenue growth in the second quarter amounted to only about 3 per cent compared to the first quarter—a tepid level of increase when seen against historical averages, the firm said. Revenue guidance from key chip suppliers for the third quarter indicates the overall market will grow by just slightly more than 6 per cent sequentially, another weak performance.

Subdued expansions during these two key quarters indicate the semiconductor market will not generate sufficient growth to prevent the market from contracting for the year, according to IHS.

PCs pull down semiconductor growth
PCs and related peripherals are the key market segment pulling down the overall semiconductor market in 2012. The previous IHS forecast predicted that the expansion of the wireless communications sector would be sufficient to propel growth for the overall semiconductor market in 2012. However, the downward pressure created by the worsening deceleration of the PC semiconductor market will outweigh the mid-single-digit growth in semiconductor demand forecast expected for wireless communications and the smaller industrial electronics segment.

"While the introduction and shipment of exciting new products such as ultrabooks and other ultrathin PC platforms in the second half of the year will give the PC market a much needed boost, the counterweight of growing economic worries will place strong downward pressure on the overall PC market and limit both consumer and corporate spending in 2012 ," said Ford.

The weak performance will result in a broad-based revenue decline in 2012 across most semiconductor component categories.

At this point, IHS is still forecasting a strong growth rebound of more than 9 per cent in 2013, based on expectations of improving economic conditions. However, multiple high-impact events still present the risk of a strong downturn in the economy in 2013, which would also pull down the electronics and semiconductor industries. These potential events range from the Eurozone crisis, to significantly slower growth in China, to the potential federal tax and budget fiscal cliff in the United States, to turmoil in the Middle East.

For more statistics and forecasts, click here.





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