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Analyst predicts IC market to contract by 0.1%

Posted: 28 Aug 2012 ?? ?Print Version ?Bookmark and Share

Keywords:IHS? semiconductor market? Ultrabook? IC Insights?

IHS has forecasted that semiconductor sales will contract by 0.1 percent compared last year. According to the market research firm, this is due to the weak economic conditions and a corresponding reduction in demand for PCs and other electronics.

Previously, IHS forecasted marginal chip market growth of less than three percent.

If the projection is accurate, 2012 will mark the first year of decline for the chip market since 2009.

"The expected decline in 2012 represents a major event for the global semiconductor market," said Dale Ford, senior director at IHS.

Several semiconductor market watchers have reduced their forecasts for the 2012 market in recent weeks, including IC Insights Inc., Semico Research Corp. and Future Horizons Ltd. A number of analysts are now projecting that 2012 sales will be roughly flat with 2011, though most market watchers are still projecting growth of two to four percent for the year.

Ford said that while electronics markets were very weak throughout 2011, IHS never projected chip sales to decline for the year. But disappointing results in Q2 and weak Q3 expectations driven by poor economic conditions promoted IHS to project slight contraction for the year, he said.

Global chip sales declined 3.6 percent in Q1 compared with 4Q11, IHS said, reflecting normal seasonal patterns. But chip sales grew only three percent in Q2 compared with Q1, a tepid increase when compared to historical seasonal averages, the firm said.

If the semiconductor industry were on a trajectory for stronger growth in 2012 compared to 2011, Q2 sequential growth would have been expected to amount to at least four percent or more, IHS said.

2012 Chip Market Forecast
Complied by: SEMI, EE Times.

Sales targets provided by key chip suppliers indicate that the market will growth six percent sequentially in Q3, another relatively weak seasonal performance, IHS said. Subdued expansions for the key Q3 and Q4 indicate the semiconductor market will not generate sufficient growth to prevent the market from contracting for the year, according to IHS.

IHS said PCs and related peripherals are the key market segment pulling down the overall chip market in 2012. The previous IHS iSuppli forecast predicted that the expansion of the wireless communications sector would be big enough to propel growth for the chip market this year. But the downward pressure created by the worsening deceleration of the PC semiconductor market is now expected to outweigh the mid single-digit growth in semiconductor demand forecast expected for wireless communications and the smaller industrial electronics segment, according to IHS.

Ford shipments of new products such as Ultrabooks and other ultrathin PC platforms in the H2 would give the PC market a much needed boost, but not enough to offset the counterweight of growing economic worries limiting consumer spending.

IHS now expects broad-based revenue decline in 2012 across most semiconductor component categories.

IHS is still forecasting a strong rebound of more than nine percent growth in 2013, based on expectations of improving economic conditions. But multiple high-impact factors still present the risk of a strong downturn in the economy in 2013, which would also pull down the electronics and semiconductor industries, according to IHS. These factors include the Eurozone crisis, significantly slower growth in China, the potential federal tax and budget "fiscal cliff" in the U.S. and turmoil in the Middle East, according to IHS.

- Dylan McGrath
??EE Times

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