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Wednesday, June 22, 2011

Gartner cuts 2011 chip forecast

While IHS iSuppli has slightly raised its forecast for the global semiconductor industry this year, Gartner has revised downward its growth projection for the sector to 5.1% from 6.2% previously predicted.

Gartner said the earthquake and tsunami in Japan raised concerns about the supply of silicon wafers, batteries, crystal oscillators, packaging and other specialized materials, but the supply constraints have not derailed the electronics industry.

"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," said Peter Middleton, principal research analyst at Gartner.

Gartner now forecast that worldwide semiconductor revenues will total US$315 billion in 2011, up 5.1% from US$299 billion in 2010. This is down from the firm's previous projection in the first quarter for 6.2% growth this year.

"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," Middleton continued. "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."

Worldwide application-specific standard product (ASSP) revenues are projected to reach US$79.7 billion in 2011 and grow to US$99.4 billion by the end of 2015, Gartner said. Meanwhile, with Apple's application-specific integrated circuit (ASIC) investment and a commanding grip on popular mobile devices, the ASIC market will experience solid growth through 2015, Gartner indicated. The highest overall growth through 2015 is coming from nonoptical sensors, which are primarily driven by automotive applications, but high growth is coming from increased sensor use in applications outside automotive, especially smartphones, tablets and video game hardware.

Gartner's analysts are seeing rapid semiconductor growth in the smartphone and media tablet categories. Through 2013, two-thirds of semiconductor industry revenue growth will come from smartphones and tablets, Gartner noted.

IHS said that the semiconductor industry is showing "remarkable resilience in the face of the Japan disaster and uncertain economic conditions." Anticipated soaring sales of popular consumer products such as smartphones and tablets has prompted the firm to raise its growth forecast this year to 7.2%.

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