Analysts downgrade 2012 chip market forecast

Computerworld - An industry analyst firm downgraded its 2012 forecast for the global semiconductor market based on slumping economic conditions and chip revenue.

The worldwide chip market, which had been expected to grow by less than 3% for the year, is projected to decline by 0.1%, according to IHS iSuppli.

If this downward trend continues through the rest of the year, it will be the first annual decline for the global semiconductor industry since 2009, the analyst firm said.

"The expected decline in 2012 represents a major event for the global semiconductor market," said Dale Ford, senior director at IHS, in a statement. "Throughout all of 2011, even though electronics markets were very weak, IHS never projected revenue to decline for the entire year. However, the 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."

News of a sluggish chip market comes just months after analysts at Gartner predicted that the market was poised for a solid rebound.

In March, Gartner said global computer chip revenue was expected to reach $316 billion this year, a 4% increase over 2011.

Now, IHS doesn't see that happening. The analyst firm said PCs and related peripherals are the key market segments pulling down the overall semiconductor market in 2012.

A previous IHS forecast predicted that growth in the wireless sector would be enough to propel the overall semiconductor market in 2012. However, the slipping PC market is causing enough drag to outweigh any growth in the wireless market.

"While the introduction and shipment of exciting new products, such as ultrabooks and other ultrathin PC platforms, in the second half of the year will give the PC market a much needed 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," Ford said.

The weak performance, he added, will result in a broad-based revenue decline that crosses most semiconductor component categories this year.

Not all the news is grim, however. IHS is still forecasting a strong rebound of more than 9% in 2013.

Analysts hedged their bets, though, noting that a growing economic crisis in Europe, slow chip growth in China or more economic trouble in the U.S. could diminish any chance of growth.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her email address is sgaudin@computerworld.com.

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