Growth forecast down for global semicon industry?

August 1, 2011

There are two different sets of predictions about the global semiconductor industry. First, IC Insights lowered its growth forecast for 2011 from 10 percent to 5 percent and the 2011 IC market forecast from 10 percent to 4 percent. Following this, the Semiconductor Industry Association (SIA), announced that global sales of semiconductors were $24.7 billion for June 2011, a 1.5 percent decrease from the prior month when sales were $25 billion and 0.5 percent decrease from a year ago.

Sales in Q2-11 were down 2 percent compared to the prior quarter. Despite these, the global semicon industry registered growth of 3.7 percent during H1-2011, noted SIA. These are indeed interesting!

Brian Toohey, president, SIA, remarked, “Despite this month’s modest contraction in sales, the industry saw a 3.7 percent increase in the first half of 2011 sales compared to the same period last year which saw record breaking growth.”

At first glance, these lower predictions could be attributed to the still-recovering Japan. IC Insights has lowered projections owing to poor performance by the global economy in the first half of 2011. On the other hand, SIA is hopeful of the inclusion of more green and smart technology in vehicles, although it is still a few years away.

Besides Japan, IC Insights has listed the Arab unrest and higher oil prices, surge of natural disasters in the US, and European debt crises and US debt ceiling deadline as the economic headwinds during H1-2011. Will those go away so soon?

While the global GDP growth during H2-2011 is not likely to go back to the levels registered during the first three quarters of 2011, it is expected that there may be some improvement.

IC Insights’  forecast also assumes that the issues mentioned will be resolved and none of those will cause any serious negative financial situation for the global economy in H2 of 2011.

Just last month, Dr. Wally Rhines, chairman and CEO, Mentor Graphics, said: “There is more new capacity coming into foundries by 2012. Investment in memory has been modest. However, fabless companies should find more capacity in 2012.” One hopes this holds true!

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