December 5, 2012 - Chip sales growth continues to soften in 2012 as the industry slips from "stagnation" to "slump," though this also sets the stage for a rebound in 2013, according to updated analysis from IHS iSuppli.
Five of six major end-markets for semiconductor applications are expected to decline in 2012, says Dale Ford, senior director, electronics and semiconductor research for IHS. (Communications demand, i.e. smartphones, continues to proliferate and push computing to the back burner as a key end-market driver). "An extremely weak global economy resulted in poor demand for electronics. As a result, the semiconductor industry slipped from stagnation in the first half of 2012 to a slump in the second half."
Back in August the firm switched its outlook for 2012 from a very slight gain to a very slight decline (and further nudged it down to a -1.7% decline in a September update). At the time this was called "a major event for the global semiconductor market" since even the weakest markets of 2011 hadn't triggered a full-year revenue dropoff. IHS iSuppli's previous outlooks during the year were 3.0% growth (to $320.8B) in July, 4.3% (to $324.6B) in April, and its original 3.3% growth outlook issued in January.
iSuppli's latest forecast for individual sectors sees declines across the major end markets: data processing, consumer electronics, industrial, and wired communications. The PC-dominated "data processing" segment, the largest of them all, is expected to drop -7.8% this year as global PC shipments shrink for the first time in 11 years, attributed to a combination of economic factors and competition from other platforms i.e. tablets. Only one end market is seen growing, and no surprise: wireless communications (i.e. smartphones and media tablets), with 7.7% expansion, Ford notes.
By technology component, only four chip segments will avoid a sales decline in 2012: CMOS image sensors (31.8%, light-emitting diodes (LEDs. 17.5%), application-specific logic ICs (5.6%), and sensors (4.1%). As ever in recent years, memory overall is dragging down the group with a -10.7% slide, and that includes a decline for the typically hot NAND flash segment, iSuppli notes. Discretes won't fare any better (-10.6%). TI's withdrawal from the wireless baseband market spells a -30.9% plunge for the digital signal processing (DSP) category.
After lackluster performances in 2Q12 and 3Q12, Ford predicts a slight 1.9% uptick in chip sales in 4Q12 vs. a year ago. Even such "slender growth [...] could set the stage for a return to a consistent pattern of expansion in 2013," he writes. The firm tentatively predicts semiconductor revenue will expand by 8.2% in 2013 -- if expectations of improved worldwide GDP growth for 2013 holds up.
Forecasted growth of global semiconductor revenues (in US $). Source: IHS iSuppli