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IDC: Chip market to bounce back in 2013

Posted: 27 May 2013     Print Version  Bookmark and Share

Keywords:semiconductor industry  IC market  sales revenues  market analysis 

International Data Corp.'s (IDC) Semiconductor Application Forecaster (SAF) stated that the global semiconductor revenues decreased by 2.2 per cent year over year (YoY) to $295 billion in 2012. The second half of 2012 was not good for the IC industry due to the weak consumer spending across PCs, mobile phones, and digital televisions (DTVs). The slowdown was not just in the consumer market but it was also felt in the industrial sector.

Other factors that may have added to the drop in demand are the European economic crises and a slowdown in China also had an impact on global demand. The lacklustre launch of Windows 8 failed to stimulate PC sales and turn the tide. Meanwhile, competitive suppliers from China continued to pressure average selling prices, dragging down overall revenue growth. IDC expects the semiconductor market to return to growth in 2013 with revenues forecast to increase by 3.5 per cent this year.

IDC's SAF tracks more than 120 semiconductor companies. Most companies saw their revenues decline during the year, including eight of the top ten companies. Only 17 companies, with revenues of a billion or more, grew at a rate above 5 per cent last year. Among the 25 largest companies covered in the SAF, only seven had positive top-line growth, including: Qualcomm, Broadcom, NXP, NVIDIA, MediaTek, Apple, and Sharp Electronics. AllWinner, a tablet application processor supplier, was the fastest growing company in 2012.

The largest semiconductor company, Intel, saw its revenues decline to Rs.2.69 lakh crore ($50 billion) in 2012, down 3 per cent from 2011 largely due to weak PC demand, and minimal traction in tablets and smartphones. Samsung Electronics, the second largest supplier, saw revenues drop 6 per cent on weak DTV demand, loss of market share at Apple, and volatile memory prices. Meanwhile, Qualcomm, the largest fabless semiconductor supplier, ranked third last year as revenues grew 34 per cent to Rs.70,967.74 crore ($13.2 billion) due to its leadership in modem technology and success of its Snapdragon application processor in smartphones. Texas Instruments, the No. 4 supplier, saw revenues decline by 6 per cent due to falling analogue, DSP, and MPU revenues and the company's exit from its wireless business. Rounding out the top 5, Toshiba revenues were off by 13 per cent from the previous year due to declining revenues for its analogue, ASSP, and memory products.

Renesas, Hynix, Broadcom, STMicroelectronics, and Micron filled out the top 10 spots. From this group of companies, only Broadcom saw revenues grow last year. Combined, the top 10 vendors represented 52 per cent of worldwide semiconductor revenues, declining 3 per cent when compared to 2011. The top 25 semiconductor firms brought in $206 billion, declining 3 per cent YoY.

Within the semiconductor device types, performance was mixed. Sensors and actuators grew the fastest at 11 per cent YoY, but with 2012 revenues of Rs.37,634.41 crore ($7 billion) the segment only accounted for 2 per cent of industry revenues. ASSPs, the largest category of semiconductors with 32 per cent of the overall opportunity, grew by 4 per cent for the year on strength in media, graphics, and application processors and RF and mixed-signal ASSPs. Finally, optoelectronics, with 6 per cent of total semiconductor revenues, grew 5 per cent, mostly from image sensors and LEDs. Revenues for microcomponents dropped 5 per cent due to the low revenues for MPUs and MCUs. Memory, representing 17 per cent of the industry, saw its revenues decline by 10 per cent. Finally, analogue, which accounted for 7 per cent of revenues last year, declined by 7 per cent.

"Beyond the slowdown in end-market demand, the challenge for semiconductor companies is to zero in on their key value propositions. Whether that is in modem or connectivity technologies, sensors, mixed-signal processing, or power management, there are areas of the market showing strong potential. However, competing in crowded segments with little differentiation has contributed to the slowdown in semiconductor revenues," said Michael J. Palma, research manager, semiconductors at IDC, who led the study and compiled the SAF results. "Large vendors have been going through a process of narrowing their product portfolios to focus resources on profitable lines where their IP and experience provide an edge in the market," Palma added.

"As we mentioned in our Top 10 Predictions for the 2013 worldwide semiconductor market, investment in R&D and capital in the semiconductor industry remains very high and focused on innovation and addressing the competitive dynamics of a diverse set of industries that semiconductors support. In fact, the overall market landscape and reach of semiconductors continues to expand with the rise of Intelligent Systems and will play a critical role in the overall health and growth of the market," said Mario Morales programme vice president for enabling technologies and semiconductors.

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