SAN FRANCISCO—A key market watcher is expected to announce Friday (Aug. 24) a downgraded 2012 chip market forecast projecting sales to decline slightly compared to 2011.
Based on weak economic conditions and a corresponding reduction in demand for PCs and other electronics, IHS iSuppli (Englewood, Colo.) now expects semiconductor sales to contract by 0.1 percent compared to 2011. The projection is based on preliminary results from the firm's IHS iSuppli Application Market Forecast Tool (AMFT).
Previously, the IHS AMFT had forecast marginal chip market growth of less than 3 percent.
If the projection is accurate, 2012 will mark the first year of decline for the chip market since 2009.
"The expected decline in 2012 represents a major event for the global semiconductor market," said Dale Ford, senior director at IHS.
Several semiconductor market watchers have reduced their forecasts for the 2012 market in recent weeks, including IC Insights Inc., Semico Research Corp. and Future Horizons Ltd. A number of analysts are now projecting that 2012 sales will be roughly flat with 2011, and some--including veteran semiconductor market analyst Mike Cowan and research firm Semiconductor Intelligence--now project that the market will contract this year. Other notable market watchers are still projecting growth ranging from 2 to 8 percent for the year.
Ford said that while electronics markets were very weak throughout 2011, IHS never projected chip sales to decline for the year. But disappointing results in the second quarter and weak third quarter expectations driven by poor economic conditions promoted IHS to project slight contraction for the year, he said.
Global chip sales declined 3.6 percent in the first quarter compared with the fourth quarter of 2011, IHS said, reflecting normal seasonal patterns, But chip sales grew only 3 percent in the second quarter compared with the first quarter, a tepid increase when compared to historical seasonal averages, the firm said.
If the semiconductor industry were on a trajectory for stronger growth in 2012 compared to 2011, second-quarter sequential growth would have been expected to amount to at least 4 percent or more, IHS said.