Gartner: Chip market to grow 5.1% in 2011

LONDON – The global semiconductor market will be $315 billion in 2011, an increase of 5.1 percent on 2010, according to market research firm Gartner Inc. This is down from Gartner's previous forecast, given in the first quarter, for 6.2 percent growth this year.

The company believes that there is a general stagnation with the exception of a bright spot in demand for smartphones and tablet computers which will be responsible for two-third of revenue growth for the period 2011 to 2013.

The 2011 chip market is going to be affected by the earthquake and tsunami that struck Japan but despite concerns about the supply of silicon wafers, batteries, packaging and specialized materials, the situation has "not derailed the electronics industry," Gartner said.

"The disaster in Japan clearly had an impact on the semiconductor market, and supply chain behavior, but it is less than initially feared," said Peter Middleton, principal research analyst at Gartner. "In response, in the last two weeks of March, vendors stepped up efforts to secure supply in the face of uncertainty and potential shortfalls — leading to some double ordering which continued into the second quarter. We think vendors were cautious with their second quarter guidance, and we expect the majority will exceed those estimates."

"Although the impact is less than feared, we are anticipating some residual effects in the third quarter of 2011 as friction in the supply chain may impact some production and some surprises may occur," Mr. Middleton said. "However, once third-quarter trends are established and supply chain participants are satisfied that all issues are understood and production is normalized, we expect an effort to draw down inventory, which will weaken the semiconductor market in late 2011 and early 2012."