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Semiconductor Revenue to Fall Slightly in 2012

The global semiconductor industry will decline slightly in 2012 because of continuing weak economic conditions and sluggish PC demand, according to an updated forecast by researcher IHS.

Global semiconductor revenue now is expected to decline 0.1 percent to about $312.48 billion, the researcher reported. Previously, IHS had forecast 3 percent growth for the industry.

“The expected decline in 2012 represents a major event for the global semiconductor market,” said Dale Ford, senior director at IHS. “Disappointing results in the second quarter and weak third-quarter expectations driven by poor economic conditions are expected to cause the semiconductor market to retreat this year.”

Global semiconductor revenue fell 3.6 percent in the first quarter of 2012 compared to the fourth quarter of 2011. However, revenue in the second quarter grew 3 percent compared to the first quarter, a sluggish increase compared to historical averages, according to IHS.

Based on revenue guidance from chip suppliers for the third quarter, the overall semiconductor market will grow by just slightly more than 6 percent sequentially, which is also weak compared to the historical third-quarter average growth rate, IHS reported.

Tepid growth in the second and third quarters indicates that the semiconductor market will not generate sufficient growth to prevent the market from contracting for the year.

Weak demand for PCs and related peripherals are dragging down the overall semiconductor market. Single-digit growth in wireless communications will not be enough to outweigh sluggish computer sales.

“While the introduction and shipment of new ultrabooks and other ultrathin PCs in the second half of the year will give the PC market a boost, the counterweight of growing economic worries will place strong downward pressure on the overall PC market and limit both consumer and corporate spending in 2012 ,” said Ford.

The good news for the industry is that growth will return in 2013 when the semiconductor market will grow 9 percent, according to IHS.