Date: 19/09/2011

2011 semiconductor revenues to reach $299 billion, Gartner estimates

Market researcher Gartner reports worldwide semiconductor revenue has slowed in 2011, and the market is on pace to have revenue total $299 billion.

"Three key factors are shaping the short-term outlook: excess inventory, manufacturing overcapacity and slowing demand due to economic weakness," said Bryan Lewis, research vice president at Gartner. "Semiconductor companies' third-quarter guidance is well below seasonal averages. The current guidance by vendors points to flat to down third-quarter growth. Typically, we see guidance for 8 to 9 percent growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated."

"2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6 percent to 4.6 percent due to a worsening macroeconomic outlook," Mr. Lewis said. "However, the odds of a double-dip U.S. recession continue to rise and are raising fear that sales prospects will deteriorate further. Gartner is closely monitoring IT and consumer sales trends for any significant signs of weakness."

Gartner says PC production unit growth has significantly decreased. Last quarter, Gartner estimated PC production growth of 9.5 percent; that has now been reduced to 3.4 percent. Gartner has lowered its forecast of mobile phone production unit growth from a second-quarter projection of 12.9 percent growth to 11.5 percent growth in this most recent outlook.

Gartner finds DRAM has been severely impacted by reduced PC demand and falling prices and is now expected to decline 26.6 percent in 2011. NAND flash and data processing ASIC are the fastest-growing device areas in 2011, with about 20 percent growth, as per Gartner. This growth is due in part to the strong growth in smartphones and iPads, adds Gartner