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December 04, 2012

Semiconductor Market Expected to Decline by 2.3 Percent in 2012

Is it any surprise that weak economic conditions have seen forecasts in tech spending go down? IHS (News - Alert) has downgraded its forecast, and now expects the global chip market in 2012 to decline by 2.3 percent. This is a decrease from $310 billion in 2011 to $303 billion in worldwide chip sales.

This predicted global semiconductor decline is the first annual decline since 2009. The six major application markets for semiconductors, which include key computer segments, are also expected to pull down the overall chip market performance as they contract. The poor electronics demand slipped the semiconductor industry from stagnation earlier in 2012 to a slump later in the year, with the fourth quarter expected to bring a mild recovery, which will hopefully set the stage for a market rebound in 2013.


As a result of competition from media tablets and economic factors, the global decline in PC shipments has taken a toll on the semiconductor application market. The 7.8 percent plunge this year has been reflected across various chip application markets from data processing, industrial, wired, consumer electronics to automotive segments. The wireless segment is the only area that seems to be hot right now – not to mention the only one expected to experience any substantial growth.

Sequential and year-over-year quarterly increases have been very disappointing throughout 2012, with only the fourth quarter of this year showing any improvement compared to 2011. It looks like IHS predictions back in 2011 could just be coming true, as it predicted that no meaningful rebound in revenue growth can be expected until 2013.

Breaking down the chip component segments, only four exceptions are expected to see a revenue increase in 2012; CMOS image sensors, LEDs, application-specific logic ICs and sensors. CMOS sensor revenues are forecasted to see a 31.8 percent annual growth rate, while LEDs will deliver double-digit increases at 17.5 percent. Application specific logic ICs and sensors will grow at 5.6 percent and 4.1 percent respectively.




Edited by Allison Boccamazzo
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