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Wall Street Beat: Chips, mobile devices in spotlight as tech slumps

Tech shares continue to decline as even Apple heads south

By Marc Ferranti
December 7, 2012 03:36 PM ET

IDG News Service - Even though sales of some mobile devices are booming, overall confidence in the tech sector continues to erode as economic weakness puts downward pressure on the computer market.

The Nasdaq Computer Index slumped Friday afternoon, hitting 1520.61, down by 15.04 points for the day and by 38.26 points for the week. Even mighty Apple was down by US$15.24 to $532.20, its lowest point since May.

The chip market has done more poorly than expected this year, according to a report this week from market research company IHS. IHS downgraded its forecast for the global semiconductor market in 2012, with revenue now expected to decline year over year by 2.3 percent, to $303 billion.

IHS has been steadily cutting its estimates. In August it forecast a 0.1 percent retreat for the year and in August it forecast a 1.7 percent decline.

The world economy is to blame, IHS said.

"An extremely weak global economy resulted in poor demand for electronics. As a result, the semiconductor industry slipped from stagnation in the first half of 2012 to a slump in the second half," said Dale Ford, senior director, electronics and semiconductor research for IHS, in the report

There is hope for next year, however.

"One of the few silver linings is that the fourth quarter is expected to bring a mild recovery in year-over-year growth, setting the stage for a market rebound in 2013," Ford said.

Still, this year will bring about the first annual decline for the global semiconductor industry since 2009, when the market was in the heart of the recession. Slumping computer sales have hit the chip industry hard, IHS said, even as mobile devices continue to sell well.

However, not all segments of the mobile market are booming. For example, though smartphone shipments this year are expected to total 717 million, a whopping year-over-year jump of 45 percent, overall mobile phone shipments are forecast to increase only by 1.4 percent, IDC said in a report this week. This overall growth is the smallest in three years, IDC said.

Once again, the blame was pinned on the global economy.

"Sluggish economic conditions worldwide have cast a pall over the mobile phone market this year," said Kevin Restivo, a senior research analyst at IDC. IDC, however, is also hopeful about a recovery.

"However, the fourth quarter will be relatively bright due in part to sales of high-profile smartphones, such as the iPhone 5 and Samsung's Galaxy S3, in addition to lower-cost, Android-powered smartphones shipped to China and other high-growth emerging markets," Restivo said.

In a separate report, IDC was sanguine about the tablet market, predicting a steady rise in sales of the devices from the fourth quarter this year through 2016. A strong competitive landscape -- including strong Android tablet shipments and hearty demand for Apple's new iPad mini -- led IDC to hike its 2012 forecast for the worldwide tablet market to 122.3 million units, up from its prior forecast of 117.1 million units.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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