Q2 semiconductor revenue may be “troubling” indicator of market health

August 23, 2012 — Global semiconductor market revenue in Q2 2012 fell by 3% year-on-year (Y/Y) to $75.2 billion, resulting in widespread revenue declines for chip suppliers, particularly those headquartered in Japan and Europe, according to the IHS iSuppli Competitive Landscaping Tool.

In a troubling sign for the health of the semiconductor market in 2012, Q2 revenue increased by less than 3% compared to the typically weak first quarter. If the semiconductor industry were on a trajectory for stronger annual growth in 2012, sequential growth would be expected to amount to at least 4% or more in Q2.

The disappointing sequential growth came amid economic concerns such as “the Eurozone crisis, slowing manufacturing growth in China and stubbornly highly unemployment in the US,” said 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 the second quarter compared to the same period in 2011. This weak performance bodes ill for the semiconductor industry’s growth prospects for the entire year.”

Also read: 2012 semiconductor revenue forecast bumped up 1 point at IHS and Semiconductor industry revenue targets $323.2B in 2012

Global semiconductor revenue expanded by a marginal 1.4% in 2011. The new IHS forecast calls for an even weaker market in 2012. However, given weakness in the first half of the year, that forecast is likely to be downgraded even further.

Table 1. IHS ranking of the world’s Top 10 semiconductor suppliers in the second quarter based on revenue ($M).

Q2-11
Rank

Q2-12
Rank

Company Name

Q2-11
Revenue

Q2-12
Revenue

Revenue
Percent
Change

Revenue
Percent
of Total

Revenue
Cumulative
Percent

1

1

Intel

11,645

12,010

3.1%

16.0%

16.0%

2

2

Samsung Electronics

7,159

7,571

5.8%

10.1%

26.0%

3

3

Texas Instruments

3,597

3,128

-13.0%

4.2%

30.2%

7

4

Qualcomm

2,319

2,869

23.7%

3.8%

34.0%

4

5

Toshiba

2,786

2,381

-14.5%

3.2%

37.2%

6

6

SK Hynix

2,523

2,233

-11.5%

3.0%

40.1%

5

7

STMicroelectronics

2,567

2,147

-16.4%

2.9%

43.0%

8

8

Renesas Electronics Corp.

2,253

2,098

-6.9%

2.8%

45.8%

10

9

Broadcom

1,742

1,917

10.0%

2.5%

48.3%

9

10

Micron Technology

1,815

1,780

-1.9%

2.4%

50.7%

 

 

Other Companies

39,141

37,113

-5.2%

49.3%

100.0%

 

 

Total Semiconductor

77,547

75,247

-3.0%

100.0%

 

 

Top 10 semiconductor makers face challenges

The revenue decline was felt by companies in all regions. Companies based in all four major global regions saw their collective semiconductor revenues fall Y/Y in Q2.

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 the second quarter of 2011.  Four of those companies suffered double-digit revenue declines.

 

Eurozone crisis

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 the second quarter fell by 8.3% compared to a year earlier, the worst performance among all global regions, as shown in the figure attached. Two-thirds of all European suppliers saw their revenues fall during the period.

 

Top European semiconductor suppliers STMicroelectronics and Infineon Technologies saw double-digit year-over-year revenue declines of 16.4% and 12.9%, respectively.

 

Japanese face seasonal slump

Collective revenue for Japanese semiconductor suppliers retreated by 7.5% in the second quarter compared to the first quarter.

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 year — followed 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.

 

Table 2. Total Semiconductor Revenue Change by Company Headquarters Location.

Company Headquarters

Q2-11 to Q2-12

Q1-12 to Q2-12

Worldwide

-3.0%

2.7%

  Americas

-2.5%

3.6%

  EMEA

-8.3%

5.0%

  Japan

-4.6%

-7.5%

  Asia-Pacific

-0.6%

8.4%

 

Figure. Total semiconductor revenue change by company HQ.

Semiconductor winners

Among the world’s Top 10 semiconductor suppliers, Qualcomm stood out with its 23.7% growth, which boosted it to No. 4 in overall rankings, up from seventh place one year earlier. Broadcom also achieved double-digit growth at 10.0%. This pushed the company up one position in the rankings to ninth place.

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

IHS (NYSE: IHS) is the leading source of information and insight in critical areas that shape today’s business landscape, including energy and power; design and supply chain; defense, risk and security; environmental, health and safety (EHS) and sustainability; country and industry forecasting; and commodities, pricing and cost. For more information, visit www.ihs.com.

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