31 January 2012
2012 semiconductor revenue to endure slow growth?
The global chip market is expected to endure slow growth in 2012, due to an uncertain economy and semiconductor inventory not moving quickly enough to stimulate new production, according to IHS iSuppli.
The market analyst forecasts semiconductor industry revenue for 2012 to reach $323.2billion, up 3.3% from last year's revenue of $312.8bn. While expansion is expected to be better than the 1.25 increase of 2011, IHS believes the overall picture could improve if the global economy recovers in 2013. Under such a scenario, it forecasts growth from 2013 to 2015 will average between 6.6 to 7.9%, with total semiconductor revenue by 2015 rising to $397.7bn.
Len Jelinek, director and chief analyst of semiconductor manufacturing research at IHS, said: "Much of the weak performance in both 2011 and this year can be attributed to external circumstances over which the semiconductor industry has no control - the ambiguous state of the global economy, along with assorted troubles in the world's major markets of the United States, Europe, Japan and China. And because the world economy is not in a strong enough position to drive growth, the semiconductor business is coming under pressure."
According to IHS, consumer spending is also a key factor determining conditions in the chip market. Although consumer spending lowered the level of inventory of electronic devices and other items incorporating semiconductors during the 2011 holiday season, the reduction was insufficient to re-energise chip demand to replenish stockpiles. A deliberate decrease in manufacturing run rates by companies in the third quarter of 2011 proved unable to bring inventory down to levels that would have fired up additional orders and increased factory run rates. As a result, IHS says semiconductor demand for manufacturers will remain 'depressed' until the second quarter of 2012.
Such developments could have a ripple effect throughout the industry. For instance, IHS warns that because factory utilisation will not recover until the middle of 2012, the integrated device manufacturers that both design and manufacture semiconductors in house will experience even greater stress to simply maintain the viability of underperforming factories. And, with current manufacturing capacity deemed acceptable for meeting demand, the analyst believes most capital expenditures to boost efficiency within the industry likely will be pushed out to 2013.
IHS reports that the most beleaguered semiconductor segment will be the memory space, especially in DRAM, with revenue projected to decline to 16.1% in 2012 on top of a 26.8% fall in 2011. And NAND flash will suffer this year because of additional capacity coming on to meet a surge of demand for the memory in devices like mobile handsets and media tablets.
In contrast, IHS says the wireless communication segment will be a strong market revenue driver this year, spurred by media tablets, smartphones and industrial electronics. For the semiconductor industry to revitalise, however, IHS believes it is imperative that the core pc and peripheral markets experience a significant increase in demand.
IHS reports, "The first half of 2012 is almost certain to be a challenging period for the industry, with negative growth being forecast for the historically slow first quarter season. The industry will begin to rebound in the second quarter and then go on to a strong third quarter, as is normal for the business. Foundries dedicated to manufacturing semiconductors as their main activity will continue to outperform the industry, while IDMs will have lower growth, especially as they have abdicated manufacturing in leading edge technology - where the high margins are - to the foundries. The advice is for IDMs not to sit by idly and allow fabless or foundry companies to control leading edge design or production on their own. Otherwise, they risk consolidation, which would have the unintended effect of providing rival foundries with even more opportunities for additional growth."
Author
Chris Shaw
Supporting Information
Websites
http://www.isuppli.com
Companies
iSuppli
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