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Demand for industrial semiconductors will recover

Demand for industrial semiconductors will strengthen in 2013 and grow steadily through 2016.
The industrial electronics semiconductor market will end 2012 growing 3 percent to $31.4 billion as weak economic conditions resulted in less demand than was originally forecast, according to researcher and analytics provider IHS.

However, demand will recover in 2013 when the market will increase to $34.1 billion and grow steadily until 2016 when the industrial chip market reaches $44.8 billion, the researcher reported.

Revenue for industrial semiconductors, which are used in wide variety of equipment ranging from home automation to industrial controls, totaled $30.5 billion in 2011. IHS had previously forecast that the industrial semiconductor market would increase 7.7 percent in 2012. In 2011, the market had grown 9 percent and in 2010 revenue increased 35 percent.

“The chip revenue forecast was dialed back after economic headwinds got stronger in the second quarter,” said Jacobo Carrasco-Heres, industrial electronics analyst at IHS. “When hoped-for growth did not pan out as expected and sales eventually came out lower, the market was downgraded to reflect the changed circumstances.”

Among the companies affected by the downturn in industrial semiconductors are Texas Instruments, Analog Devices Inc., Infineon Technologies, Atmel, Fuji Electric, and Linear Technology.

The bright spot of the industrial chip market was light-emitting diode (LED) market because of the “LED lighting boom that has taken hold in many parts of the world,” said Robbie Galoso, principal analyst for electronics at IHS.

Second-quarter LED sales for Philips climbed 37 percent from year-ago levels, and other LED lamp suppliers such as Cree, LG Innotek, and Samsung LED also posted solid second-quarter results. There were other manufacturers that performed well, including Honeywell with 8 percent growth; General Electric with a double-digit increase in sales; along with Alstom, ABB, Delta, and Mindray in other industrial sales segments.

Industrial semiconductors are used in many applications. They are employed in wind turbines for renewable power, in inverters for photovoltaic solar energy, as well as in conventional oil and gas automation machinery. They are also used in military and civil aerospace, homeland security, satellites, and avionics.

Other areas of industrial chip use medical equipment and building and home control, including security systems, lighting, smart meters and climate-control devices, and medical electronics.