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Poor Q2 chip market growth hurt Japan, Europe IC suppliers

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

Keywords:semiconductor sales? chip market growth? Japan IC suppliers? revenue declines?

According to IHS, the weak economic conditions have curbed global semiconductor market revenue in Q2 that fell by three percent YoY. This resulted in revenue declines for chip suppliers, particularly those headquartered in Japan and Europe, added the market research firm.

Worldwide semiconductor sales decreased to $75.2 billion in 2Q12, down from $77.5 billion during the same period last year. In a troubling sign for the health of the semiconductor market in 2012, Q2 revenue increased by less than three percent compared to the typically weak Q1. If the semiconductor industry were on a trajectory for stronger growth in 2012 compared to 2011, Q2 sequential growth would be expected to amount to at least four percent or more.

"Amid rising economic concernsincluding the Eurozone crisis, slowing manufacturing growth in China and stubbornly highly unemployment in the U.S.Q2 growth for the global semiconductor industry was highly disappointing," noted Dale Ford, senior director of electronics and semiconductor research at IHS. "Approximately two-thirds of the world's semiconductor suppliers saw their revenues decline in Q2 compared to the same period in 2011. This weak performance does not bode well for the semiconductor industry's growth prospects for the entire year."

Global semiconductor revenue expanded by a marginal 1.4 percent last year. The IHS forecast calls for an even weaker market in 2012. However, given weakness in H1, that forecast is likely to be downgraded even further.

The revenue decline was felt by companies in all regions. Companies based in all four major global regions saw their collective semiconductor revenues fall in 2Q12 compared to the same period in 2011.

The drop in revenues among leading suppliers exacerbated the situation. Among the world's Top 10 semiconductor suppliers, six companies saw their revenues decline compared to 2Q11. Four of those companies suffered double-digit revenue declines. European-based firms took the brunt of the downturn, as the economic crisis in the region took its toll on chip sales.

Among all semiconductor suppliers in Europe, combined revenue in Q2 fell by 8.3 percent compared to a year earlier, the worst performance among all global regions. Two-thirds of all European suppliers saw their revenues fall during the period.

European semiconductor suppliers STMicroelectronics and Infineon Technologies saw double-digit YoY revenue declines of 16.4 percent and 12.9 percent, respectively.

Collective revenue for Japanese semiconductor suppliers retreated by 7.5 percent in Q2 compared to Q1. Half of the Japanese chip suppliers experienced decreases in revenue. However, deep drops in revenue by leaders such as Toshiba Corp., Renesas Electronics Corp., Fujitsu Semiconductor Ltd and Mitsubishi magnified the overall decline.

"This has become a standard pattern for revenue growth for Japanese chip suppliers, as they typically see strong growth during their fiscal year ending March each yearfollowed by a decline during their first fiscal quarter ending in June," Ford said. "The expectation is that Japanese suppliers will see a rebound in their revenues in the quarter ending in September.

Among the world's Top 10 semiconductor suppliers, Qualcomm stood out with its 23.7 percent growth, which boosted it to No. 4 in overall rankings, up from seventh place one year earlier. Broadcom also achieved double-digit growth at 10 percent. This pushed the company up one position in the rankings to ninth place.

No. 2-ranked Samsung's revenues grew by 5.8 percent, boosted primarily by its acquisition of Samsung Electro-Mechanics.

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