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IHS cuts 2011 semiconductor forecast

Posted: 23 Nov 2011 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor forecast? electronics supply chain? global economy?

IHS Inc. has lowered its global semiconductor market forecast for the year despite the anticipated growth in revenue that is seen to rise by 1.2 percent YoY. The predicted improvement is nonetheless, smaller from the IHS forecast of 2.9 percent this September.

Despite major economic headwinds, the global semiconductor market managed to expand in Q3, with revenue rising by an estimated 3.5 percent compared to Q2. While down from the September forecast of 4.8 percent growth, revenue expansion during the period means that growth for the entire year has been salvaged. While Q3 revenue increased, conditions have been worsening in the last three months of the year. Revenue is projected to decline by two percent sequentially in Q4.

"Although the forecast of 1.2 percent revenue growth in 2011 is just barely positive, an expansion of any magnitude is significant from the standpoint of market psychology," noted Dale Ford, SVP, electronics market intelligence for IHS. "Given the worsening economic environment and growing pessimism in the electronics supply chain, many market forecasters had projected Q3 revenues would decline, and pull down the results for the full year of 2011. Even the prospect of marginal growth casts a much more optimistic light on the market performance for the year."

Many major semiconductor suppliers are projecting Q4 revenue declines that average in the high single digits. However, a number of major semiconductor suppliers such as Intel, Samsung, Renesas, Qualcomm and AMD have projected solid growth in Q4 that will limit the overall market decline. In order for the full year of 2011 to wind up in negative territory, overall semiconductor revenue would have to fall by seven percent or more in Q4.

The electronics supply chain impact from the Japan disaster earlier this year played a notable role in influencing quarterly growth in Q2 and Q3. The combined revenue collapse of many major Japanese semiconductor companies that suffered damage to their facilities in the disaster pulled the semiconductor market down by at least 2.5 percentage points in Q2 and resulted in an overall market decline during that period. The rebound experienced in Q3 by these same companies as they moved with aggressive recovery efforts added more than two percent to the growth to the market, pushing it comfortably with a three percent increase for the overall market in Q3.

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