January 31, 2012 — The global semiconductor chip market will see a slow 2012, reports IHS, with uncertainty in global economics and semiconductor inventory not moving quickly enough to stimulate new production. Semiconductor industry revenue in 2012 will hit $323.2 billion, up 3.3% from 2011, shows an IHS iSuppli Global Manufacturing Market Tracker report. This is better than the near-flat growth seen in 2011 (1.25%).
Expect negative growth in Q1 2012, a nascent rebound in Q2, and strong growth in Q3 2012.
|Billions of US Dollars||$307.0||$312.8||$323.2||$348.7||$371.5||$397.7|
|Figure. Worldwide semiconductor industry revenue forecast. SOURCE: IHS iSuppli.|
If the United States and the rest of the world recover economically in 2013, growth from 2013 to 2015 will average 6.6-7.9%, with total semiconductor revenue by 2015 rising to some $397.7 billion. The semiconductor industry has "no control" over the macro-economic forces at work on its growth, said Len Jelinek, director and chief analyst of semiconductor manufacturing research at IHS. The global economy, and in particular key markets like the US and Japan, exerts pressure on the chip industry.
Consumers did help lower semiconductor inventories during the 2011 holiday season, but not enough to trigger re-stocking demand. A deliberate decrease in manufacturing run rates by semiconductor companies in Q3 2011 could not bring inventory down far enough either. Semiconductor demand will remain depressed until Q2 2012.
Because factory utilization will not recover until the middle of 2012, the integrated device manufacturers (IDMs) that design and manufacture semiconductors in-house will experience greater stress with underperforming factories. Capital expenditures for efficiency-increasing tools will likely be pushed to 2013, as long as current manufacturing capacity meets demand.
Also read: Semiconductor fab capex forecast for 2012
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 high-margin technology to the foundries. IDMs rish seeing fabless or foundry companies control leading-edge design or production, which could lead to IDM consolidation. This would have the unintended effect of providing rival foundries with even more opportunities for additional growth.
In the memory — mainly dynamic random access memory (DRAM) — sector, revenue will decline 16.1% in 2012, further depressing a sector that fell 26.8% in 2011. NAND Flash, despite strong performance in mobile handsets and media tablets in 2011, will not require another surge in production capacity.
The wireless communication segment, spurred by media tablets, smartphones and industrial electronics, will drive chip revenues. The core PC and peripheral markets must see significant demand increases to boost the semiconductor industry as a whole, IHS believes.
Learn more about this topic with the IHS iSuppli report, Weak Demand Pushes Manufacturing Recovery into Q2 2012 at http://www.isuppli.com/Semiconductor-Value-Chain/Pages/Weak-Demand-Pushed-Manufacturing-Recovery-into-Q2-2012.aspx?PRX
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