IHS cuts 2011 semiconductor growth forecast

Increasing economic woes and rising consumer pessimism are impacting global electronics demand this year, prompting information and analysis provider IHS (NYSE: IHS) to cut its semiconductor revenue growth forecast for 2011.

The latest  IHS iSuppli Application Market Forecast Tool (AMFT)™ predicts semiconductor revenue will rise by an anemic 2.9 percent in 2011 to reach $313.3 billion, up from $304.5 billion in 2010. This compares to the previous forecast issued on August 2nd of 4.6 percent growth. 

“Mounting economic weakness is taking its toll on the worldwide electronics and semiconductor industries just as these markets are entering the critical pre-holiday sales season,” said Dale Ford, vice president, electronics supply chain and semiconductors for IHS. “While economic challenges have persisted into 2011, consumer spending could have still sustained a reasonable level of growth in electronics demand if conditions had remained reasonably stable. Unfortunately, the accelerating decline and instability of the economy has reasserted itself as the primary driver of tepid electronics and semiconductor revenue growth in 2011. The continuing impact of a weakened and stagnant economy is expected to continue to drag on the semiconductor market in 2012, limiting revenue growth to 3.4 percent.”

Gross Domestic Product Sickens
The deteriorating economic environment is reflected in the consistent reductions in the 2011 gross domestic product (GDP) forecast issued by IHS Global Insight. 

In March, the global GDP growth for the year was forecast to be 3.7 percent. However, beginning in the summer, the economic environment began to deteriorate, causing IHS to reduce the forecastThe most recent GDP forecast published in September lowered the outlook to a 3.0 percent increase. During the same period, the GDP growth projection for the world’s advanced economies fell to 1.4 percent, down from 2.4 percent.

Echoes of 2008/2009 Downturn
The timing of weakening growth in the electronics and semiconductor market in 2011 mirrors the sudden drop in the business that started in the middle of the third quarter of 2008. Those declines led to an eventual plunge in semiconductor revenue of 5.3 percent in 2008 and 11.6 percent in 2009.

For 2011, however, agile adjustments in business strategy may allow semiconductor suppliers to avoid an annual decline in market revenue.

“With the memory of the painful market contraction of 2008 and 2009 still fresh in mind, participants in the semiconductor supply chain are taking defensive postures and working to reduce inventories and production levels,” Ford noted. “Because of this, IHS still believes the semiconductor market can deliver weak seasonal growth that will support a low single-digit sequential expansion in semiconductor revenues in the third quarter that will prop up overall annual growth and prevent a decline in the market for the year.”

Japan Disaster Boosts Market
Major Japanese semiconductor suppliers that were hit hard by revenue declines in the second quarter due to the earthquake/tsunami/nuclear meltdown have returned to production in an impressively short time. The near-term rebound in demand and shipments in the Japanese market and electronics industry is expected to provide a modest second-half boost to the semiconductor market.

Recession Looming?
However, despite the rebound in Japan, the very real possibility of a global economic recession cannot be ignored. IHS Global Insight estimates the possibility of a return to recession at 40 percent. If the economy falls into recession this year, the most likely result will be that semiconductor market growth will be flat for 2011.

Of greater concern is the amplified negative response to a recession in the electronics supply chain that would lead to a highly uncertain, unstable and volatile semiconductor supply and demand environment entering 2012 that would not stabilize again until 2013.

Wireless and Computer Chip Markets Expand
The growth opportunities for semiconductors in various end markets vary significantly in 2011.  Propelled by dramatic growth in smartphone and media tablet shipments, semiconductor revenue in the wireless market is expected to jump by 16.7 percent in 2011. 

In spite of pressures on the notebook PC market by media tablets, expected mid-single-digit growth in PC shipments should enable semiconductor revenues in data processing markets also to expand in the low single-digit range.  Demand for semiconductors in industrial electronics applications likewise will enable growth in this segment. 

On the downside, semiconductor revenues in wired communications, consumer electronics and automotive electronics are expected to fall in 2011.

The influence of expansion in the end markets is clearly seen in the forecast growth of major semiconductor markets. NAND flash, image sensors, light-emitting diodes (LEDs) and other sensors are expected to achieve strong double-digit growth, while dynamic random access memory (DRAM) revenue is set to fall by more than 18 percent. 

Learn More >  Third Quarter Semiconductor Growth Stunted by Economic Woes




Review Article Be the first to review this article
CST Webinar Series

EMA:

Featured Video
Editorial
Peggy AycinenaWhat Would Joe Do?
by Peggy Aycinena
Retail Therapy: Jump starting Black Friday
Peggy AycinenaIP Showcase
by Peggy Aycinena
REUSE 2016: Addressing the Four Freedoms
More Editorial  
Jobs
AE-APPS SUPPORT/TMM for EDA Careers at San Jose-SOCAL-AZ, CA
Development Engineer-WEB SKILLS +++ for EDA Careers at North Valley, CA
FAE FIELD APPLICATIONS SAN DIEGO for EDA Careers at San Diego, CA
ACCOUNT MANAGER MUNICH GERMANY EU for EDA Careers at MUNICH, Germany
Manager, Field Applications Engineering for Real Intent at Sunnyvale, CA
Upcoming Events
Zuken Innovation World 2017, April 24 - 26, 2017, Hilton Head Marriott Resort & Spa in Hilton Head Island, SC at Hilton Head Marriott Resort & Spa Hilton Head Island NC - Apr 24 - 26, 2017
CST Webinar Series



Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering TechJobsCafe - Technical Jobs and Resumes GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy Policy