2012 semiconductor revenue forecast bumped up 1 point at IHS

April 25, 2012 — The overall semiconductor industry will grow 4.3% in 2012, according to IHS, which raised its forecast 1 percentage point based on consumer demand for wireless products like smartphones and tablets. Global semiconductor revenue will reach $324.6 billion in 2012.

In 2011, the semiconductor industry as a whole grew only 1%, shows the IHS iSuppli Global Manufacturing Market Tracker report. The Semiconductor Industry Association (SIA) shows 2011 worldwide semiconductor sales hit $299.5 billion, a 0.4% increase.

With the global economy stabilized, semiconductors could see 2012 start a revenue climb to approximately $412.8 billion in 2016. Also read: Semiconductor sales flat through February 2012

Consumer faith in economic recovery is a key element in semiconductor growth, noted Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS. Semiconductor suppliers should expect a robust Q3 — traditionally a strong quarter thanks to pre-holiday production.

Consumer electronics, particularly wireless devices, will be the biggest demand drivers this year, Jelinek said, listing Apple’s iPhone and iPad, as well as “a swarm of competing products.” Long term, the ultrabook PC platform will see strong growth, but its impact on 2012 semiconductor revenues will be minimal. Ultrabooks could become a key market revenue driver as early as 2013.

NAND Flash memory, logic application-specific integrated circuits (ASIC), and microprocessors (MPU) will be the top device architectures in 2012, thanks to tablets and smartphones (NAND, logic ASICs) and notebooks/ultrabooks (MPUs).

Although semiconductor suppliers have reduced their inventory by 7.5% over the last 6 months, total inventory remains at high levels both in terms of aggregate dollar value as well as in days of inventory. Further reductions, expected through H1 2012, are necessary for chip makers to experience sustained demand. Sustainable growth will not occur until the industry reduces total inventory by at least another 5%, IHS asserts.

The largest portion of chip inventory is held by integrated device manufacturers (IDMs), which typically do not reduce inventory as aggressively as the rest of the semiconductor industry because they have larger product portfolios, and more control over inventory levels in demand scenarios. Since Q2 2011, IDMs have reduced their inventory by only 5.4%. IDMs on average hold between 77 and 79% of finished goods inventory.

IHS (NYSE: IHS) provides information, insight and analytics in critical areas that shape today’s business landscape. For more information, visit www.ihs.com.

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