LONDON – Market research company Gartner Inc. has joined rival prognosticators in predicting the 2011 global chip market will decline from the previous year. It has also halved its forecast for chip market growth in 2012 with the warning that a U.S. double dip recession would require a further downward sales revision.
The worldwide semiconductor market has been slowing throughout 2011 and is now set to have a revenue total of $299 billion, a decline of 0.1 percent from 2010, according to Gartner (Stamford, Connecticut). This is a significant change from Gartner's previous projection, given in the second quarter, for 5.1 percent growth this year.
"Three key factors are shaping the short-term outlook: excess inventory, manufacturing overcapacity and slowing demand due to economic weakness," said Bryan Lewis, research vice president at Gartner, in a statement. "Semiconductor companies' third-quarter guidance is well below seasonal averages. The current guidance by vendors points to flat to down third-quarter growth. Typically, we see guidance for 8 to 9 percent growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated."
One of the main problem areas for chipmakers is PC production, Gartner reckons. Last quarter, Gartner estimated PC production growth of 9.5 percent; that has now been reduced to 3.4 percent. The falling demand for PCs, in part highlighted by the popularity of the tablet computer and smartphone, means DRAM sales and prices have been severely impacted. The value of DRAM sales is now expected to decline 26.6 percent in 2011. Meanwhile NAND flash and data processing ASIC are the fastest-growing device areas in 2011, with about 20 percent growth.
However, Gartner has also lowered its forecast of mobile phone annual production unit growth from a second-quarter projection of 12.9 percent growth to 11.5 percent growth in this most recent outlook.
"2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6 percent to 4.6 percent due to a worsening macroeconomic outlook," Mr. Lewis said. "However, the odds of a double-dip U.S. recession continue to rise and are raising fear that sales prospects will deteriorate further. Gartner is closely monitoring IT and consumer sales trends for any significant signs of weakness."
The main reson for PC sales dip is almost the existing PC's are fast enough to perform applications in an acceptable time scale. More faster can not be handled by users. or other words more faster will not make much difference. So users are not going for new PC's. Soon this market will become for mostly the new buyers.
It says rapidly since they projected the sales to grow 5.1% so it's like a 5% drop in shipments/sales which is substantial. The surprise is why PC sales dipped to half, with new cores from Intela dn AMD and lackluster sales in 2010, the expectation was it would be real healthy. Does this portend the fact that finally Tablets are taking up the PC space?
"Chip sales slowing rapidly, says Gartner" by 0.1%. The headline seems more dramatic than the data which suggests "Chip sales flat in 2011." I wonder what the margin of error is in this prediction. Does it actually encompass the possibility of a larger decline and a small increase?
This 0.1% decline of market not impact on manufactures but PC and DDR product producers have face hard time running and emerging tablet pc and smart phones technology so pc makers unveil advance features to customers.
It is a buyers market on DRAM and on certain types of FLASH memory since there is a glut of chips.
This is a natural cycle, albeit worse due to the financial issues most people face.
Now is the time to stock up on mid-high end DRAM since the premium parts still demand premium prices.
It is also a time to stock up on mid-high end hard drives (not enterprise 10k or 15k rpm).
So stock up for your future builds!
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