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Semiconductor industry 'set to expand at slower pace' in 2012

Joshua_Evans

A new report, conducted by IHS iSuppli, has suggested that the semiconductor industry will expand at a slower pace in 2012, largely due to the ongoing economic downturn and sluggish consumer demand. The research body has said that annual revenue for the industry will hit $323 billion, a growth of 3.3 percent year-on year.
Len Jelinek, director and chief analyst of semiconductor manufacturing research at IHS iSuppli, explained that the semiconductor industry is struggling to grow during what has become one of the longest economic downturns in history.
Owing to the fact that consumers in the US, Europe, Japan and China have less disposable income, sales of popular electronic products, such as PCs, laptops and MP3s, are relatively flat.
Indeed, he observed that underwhelming demand for such products has had a residual impact on DRAM, with iSuppli saying that demand for the memory will fall 16.1 percent this year. This is, however, better than the fall seen in 2011, when demand dropped 26.8 percent, iSuppli said.
"There is one huge wild card in DRAM right now and that is industry consolidation," commented Mike Howard, senior principal analyst at iSuppli. He explained that while supply for DRAM will be up around 40 percent this year on a gigabit basis, this rise will take place in a very soft pricing environment.
Demand for NAND, meanwhile, is being undermined by the rise of smartphones and tablets devices. iSuppli said that although there is rising demand for NAND flash, additional factory capacity to meet the demand is likely to lead to oversupply. Also, it should be noted that NAND flash prices have been falling since 2010.
"Despite robust demand coming from the mobile segment, we are forecasting NAND revenue growth of only five percent in 2012 to reflect the risk of oversupply currently plaguing the industry," Dee Nguyen, analyst at iSuppli, commented.
Overall, however, iSuppli would appear to be relatively upbeat about the state of the semiconductor industry, explaining that while revenue growth is likely to be negative in the first half of 2012, it expects to see the shoots of a recovery thereafter.

A new report, conducted by IHS iSuppli, has suggested that the semiconductor industry will expand at a slower pace in 2012, largely due to the ongoing economic downturn and sluggish consumer demand. The research body has said that annual revenue for the industry will hit $323 billion, a growth of 3.3 percent year-on year.

 

Len Jelinek, director and chief analyst of semiconductor manufacturing research at IHS iSuppli, explained that the semiconductor industry is struggling to grow during what has become one of the longest economic downturns in history.

 

Owing to the fact that consumers in the US, Europe, Japan and China have less disposable income, sales of popular electronic products, such as PCs, laptops and MP3s, are relatively flat.

 

Indeed, he observed that underwhelming demand for such products has had a residual impact on DRAM, with iSuppli saying that demand for the memory will fall 16.1 percent this year. This is, however, better than the fall seen in 2011, when demand dropped 26.8 percent, iSuppli said.

 

"There is one huge wild card in DRAM right now and that is industry consolidation," commented Mike Howard, senior principal analyst at iSuppli. He explained that while supply for DRAM will be up around 40 percent this year on a gigabit basis, this rise will take place in a very soft pricing environment.

 

Demand for NAND, meanwhile, is being undermined by the rise of smartphones and tablets devices. iSuppli said that although there is rising demand for NAND flash, additional factory capacity to meet the demand is likely to lead to oversupply. Also, it should be noted that NAND flash prices have been falling since 2010.

 

"Despite robust demand coming from the mobile segment, we are forecasting NAND revenue growth of only five percent in 2012 to reflect the risk of oversupply currently plaguing the industry," Dee Nguyen, analyst at iSuppli, commented.

 

Overall, however, iSuppli would appear to be relatively upbeat about the state of the semiconductor industry, explaining that while revenue growth is likely to be negative in the first half of 2012, it expects to see the shoots of a recovery thereafter.