IHS iSuppli downgrades chip market outlook on PC weakness


IHS iSuppli is downgrading its outlook for 2012 global semiconductor revenues, shifting from slight single-digit growth to predicting the industry's first annual decline since 2009. The firm blames a weakening economy that has eroded demand for PCs and related components.

The decline is "a major event for the global semiconductor market," said Dale Ford, senior director at IHS. Even though electronics markets remained very weak through all of 2011, the firm never projected a full-year revenue dropoff, he noted. (IHS iSuppli's original 2012 forecast issued in January was for 3.3% growth; in April it inched that ahead to 4.3% citing strong ongoing consumer demand for wireless products like cellphones and media tablets, but pulled back in July to 3.0%.)

Preliminary global annual semiconductor revenue growth forecast, in % change of US $. (Source: IHS iSuppli)

Preliminary global annual semiconductor revenue growth forecast, in % change of US $. (Source: IHS iSuppli)

Global chip revenues declined a seasonally typical -3.6% in 1Q12, but increased barely 3% in 2Q12, attributed to the Eurozone crisis, slowing manufacturing growth in China, and stubbornly highly unemployment in the US. Revenue guidance from key chip suppliers (available when this issue went to press) suggested 3Q12 would be a slightly better 6% Q/Q growth, but that's merely "subdued expansion" that won't prevent a market contraction this year, the firm asserts.

IHS iSuppli still feels confident in a strong rebound in 2013, sticking with its projection of 9% Y/Y chip sales growth, assuming economic conditions improve. Still, that optimism is qualified against persistent "multiple high-impact events" that present possible risks to create a strong economic downturn, from the Eurozone crisis to slowing Chinese growth to US tax and budget expirations to Middle East turmoil.???J.M.

Solid State Technology | Volume 55 | Issue 8 | October | 2012