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goafrit
IHS said it expects semiconductor revenue to grow by 2.9% this year to reach ...
selinz
Sounds like it will be painful for a while...
IHS again cuts chip market forecast
Dylan McGrath
9/21/2011 1:17 PM EDT
SAN FRANCISCO—Market research firm IHS iSuppli Wednesday (Sept. 21) cut its forecast for 2011 semiconductor market growth for the second time in two months, citing the impact of increasing economic woes and consumer pessimism.
IHS said it now expects semiconductor revenue to grow by 2.9 percent this year to reach $313.3 billion. Last month, the firm forecast that the semiconductor market to grow by 4.6 percent in 2011, a reduction from a June forecast in which the firm called for 7.2 percent chip market growth.
Several market research firms have cut their 2011 semiconductor market forecasts in recent weeks. Last week, Bill McClean, president of IC Insights Inc., said he now expects the semiconductor market to be flat to up 5 percent compared to 2010 after earlier this year forecasting 10 percent market growth. Last week, Gartner Inc. said it now expects semiconductor industry revenue to decline slightly from 2010 after earlier saying it expected 5.1 percent growth. Early this month, Semico Research Corp. said it expects chip revenue to decline 2 percent this year after previously forecasting 6 percent growth.
Dale Ford, vice president of electronics supply chain and semiconductors for HIS, said in a statement Wednesday that mounting economic weakness was taking its toll on the electronics and semiconductor markets just as they enter the critical pre-holiday sales season.
"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," Ford said. "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."
Ford said he expects the impact of a stagnant economy to continue to drag on the chip market in 2012. IHS is currently forecasting 3.4 percent growth for semiconductors in 2012.
IHS said the timing of weakening growth in the electronics and semiconductor market this year 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.
But for this year, agile adjustments in business strategy may allow semiconductor suppliers to avoid an annual decline in market revenue, according to IHS.
"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 said. "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."
Major Japanese semiconductor suppliers that were hit hard by revenue declines in the second quarter due to the March 11 earthquake and tsunami, and subsequent nuclear meltdown, have returned to production in an impressively short time, according to IHS. 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, according to the firm.
But IHS said that despite the rebound in Japan, the possibility of a global economic recession cannot be ignored. IHS Global Insight estimates the possibility of a return to recession at 40 percent, the firm said. If the economy falls into recession this year, the most likely result will be that semiconductor market growth will be flat for 2011, the firm said.
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, IHS warned.
IHS said it now expects semiconductor revenue to grow by 2.9 percent this year to reach $313.3 billion. Last month, the firm forecast that the semiconductor market to grow by 4.6 percent in 2011, a reduction from a June forecast in which the firm called for 7.2 percent chip market growth.
Several market research firms have cut their 2011 semiconductor market forecasts in recent weeks. Last week, Bill McClean, president of IC Insights Inc., said he now expects the semiconductor market to be flat to up 5 percent compared to 2010 after earlier this year forecasting 10 percent market growth. Last week, Gartner Inc. said it now expects semiconductor industry revenue to decline slightly from 2010 after earlier saying it expected 5.1 percent growth. Early this month, Semico Research Corp. said it expects chip revenue to decline 2 percent this year after previously forecasting 6 percent growth.
Dale Ford, vice president of electronics supply chain and semiconductors for HIS, said in a statement Wednesday that mounting economic weakness was taking its toll on the electronics and semiconductor markets just as they enter the critical pre-holiday sales season.
"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," Ford said. "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."
Ford said he expects the impact of a stagnant economy to continue to drag on the chip market in 2012. IHS is currently forecasting 3.4 percent growth for semiconductors in 2012.
IHS said the timing of weakening growth in the electronics and semiconductor market this year 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.
But for this year, agile adjustments in business strategy may allow semiconductor suppliers to avoid an annual decline in market revenue, according to IHS.
"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 said. "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."
Major Japanese semiconductor suppliers that were hit hard by revenue declines in the second quarter due to the March 11 earthquake and tsunami, and subsequent nuclear meltdown, have returned to production in an impressively short time, according to IHS. 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, according to the firm.
But IHS said that despite the rebound in Japan, the possibility of a global economic recession cannot be ignored. IHS Global Insight estimates the possibility of a return to recession at 40 percent, the firm said. If the economy falls into recession this year, the most likely result will be that semiconductor market growth will be flat for 2011, the firm said.
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, IHS warned.
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selinz
9/21/2011 2:47 PM EDT
Sounds like it will be painful for a while...
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goafrit
9/22/2011 6:46 AM EDT
IHS said it expects semiconductor revenue to grow by 2.9% this year to reach $313.3 billion. Last month, the firm forecast that the semiconductor market to grow by 4.6 percent in 2011, a reduction from a June forecast in which the firm called for 7.2 percent chip market growth.
Can they break this into region - Asia, Africa, Europe and North America.
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