Date: 22/06/2011

Semiconductor industry revenue estimation for 2011: Gartner; 5.1% and iSuppli; 7.2%

The leading semiconductor market research analyst companies Gartner and iSuppli have come out with slightly different revenue estimations for the year 2011. Gartner has projected worldwide semiconductor revenue of $315 billion in 2011, a 5.1 percent increase from 2010 revenue of $299 billion. This is down from Gartner's previous projection in the first quarter for 6.2 percent growth this year.

Where as iSuppli has estimates the global semiconductor industry in 2011 to expand by 7.2 percent because of soaring sales of popular consumer products like tablets and smart phones. According to iSuppli the global semiconductor revenue in 2011 is projected to amount to $325.9 billion, up from $304.1 billion in 2010.

Both Gartner and iSuppli have analyzed earthquake and tsunami in japan has not caused any major effect on the semiconductor industry.

"The disaster in Japan clearly had an impact on the semiconductor market, and supply chain behavior, but it is less than initially feared," said Peter Middleton, principal research analyst at Gartner. "In response, in the last two weeks of March, vendors sthepped 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." "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," Mr. Middleton said. "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."

"Thanks to the hardiness of the global electronics supply chain, the semiconductor industry is set for a year of solid growth in 2011," said Dale Ford, senior vice president for semiconductor market intelligence at IHS. "Neither the Japan quake disaster nor weak economic conditions will derail the market's expansion. In fact, demand has been so strong for semiconductors in hot consumer items such as tablets and smart phones that IHS has raised its forecast slightly to accommodate the improved outlook." "Many exciting and innovative products will entice consumers to spend and support increases in electronics demand for 2011, driving continued semiconductor growth," Ford said. "However, a key consideration will be whether the economy can maintain sufficient stability to support consumer confidence and spending."

Gartner forecasts worldwide application-specific standard product (ASSP) revenue to reach $79.7 billion in 2011 and grow to $99.4 billion by the end of 2015. According to Gartner 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. 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 as per Gartner.

Gartner reports through 2013, two-thirds of semiconductor industry revenue growth will come from smartphones and tablets.

"One critical trend is the introduction of new generations of high-performance mobile application processors, which form the heart of both smartphones and media tablets," said Jon Erensen, research director at Gartner. "These high-end processors, combined with higher amounts of DRAM and NAND flash memory, will enable the performance and storage required for advanced new applications, including context-aware computing, augmented reality and computational photography."

"The similarity in architecture between smartphones and media tablets enables handset and tablet OEMs to centralize design around the application processor, which hosts the operating system of choice, and allows the vendor to leverage that design across multiple product categories," Mr. Erensen said.

The facts and trends reported by iSuppli includes:

1. The healthy rise in 2011 comes on the heels of the torrid 32.2 percent increase in 2010 when the market rebounded from the recession-driven downturn of 2009. Following the 7.2 percent increase in 2011, growth will then moderate during the following two years, rising by 4.8 and 4.0 percent, before accelerating to 8.0 percent and 7.5 percent expansions during the next two years.

2. By 2015, semiconductor revenue will reach a milestone when it tops the $400 billion mark and hits $411.8 billion, equating to a compound annual growth rate of 6.3 percent between 2010 and 2015.

3. The Year's Strongest Performers in Semiconductors, Spurred by Consumer Demand
The strongest semiconductor demand growth in 2011 will be driven by the wireless and mobile segments, led by the proliferation and high demand for devices such as media tablets, smart phones, e-book readers, solid state drives and handheld video game players. Because of this, wireless communications will generate the strongest increase in semiconductor revenue of all chip application markets in 2011, with a 17.6 percent increase.

4. Despite the popularity of tablets such as Apple Inc.'s iPad, mobile PCs also will be a healthy contributor to semiconductor growth this year. This will help make the data processing category the third-fastest growing semiconductor application market in 2011, with growth of 6.2 percent.

5. The much smaller industrial electronics segment will be the second-fastest growing semiconductor application market, with revenue rising by 7.3 percent. Sectors achieving slower expansion this year will include consumer electronics at 3.1 percent and automotive electronics at 3.0 percent.

6. In contrast, semiconductor revenue this year for wired communications is anticipated to contract by 1.7 percent, the only sector to suffer negative growth, IHS iSuppli research shows.

7. Although doubts and worries persist on the state of the world economy, the semiconductor industry is performing well against all odds, Ford observed, even on a quarterly basis. For instance, revenue in the first quarter this year declined only 1.4 percent compared to the fourth quarter of 2010. This represented the smallest sequential decrease since 2006 during what is normally the slowest season of the year for chip sales.

8. Sequential growth is anticipated to return for the rest of the year, with revenue rising by 2.9 percent in the second quarter and by 7.4 percent in the third.

9. The fastest-growing semiconductor product segments in 2011 will be image sensors, NAND flash memory, light-emitting diodes, microprocessors, discrete components, sensors and general purpose analog integrated circuits. Collective revenue from these products is projected to rise by more than 12 percent in 2011, with complementary metal-oxide semiconductor (CMOS) image sensors leading all products with 36 percent growth.