Chip forecast revised on slowing PC demand

Slowing demand for PCs because of the poor global consumer economy could hurt HP, Dell and Intel...
Written by Tom Foremski, Contributor

Market research firm iSuppli has cut its global chip revenue forecast by 9 per cent because of slowing demand from the consumer sector and a rise in chip inventories.

The forecast has been cut to 32 per cent growth this year from 35.1 per cent. Chip sales are expected to reach $302 billion this year compared with $228 billion in 2009.

Growth in 2011 is expected to be a paltry 5.1 per cent.

“There has been a significant slowdown in the second half in consumer demand for some electronic devices, including PCs,” noted Dale Ford, senior vice president at iSuppli. “Meanwhile, inventories have been building throughout the semiconductor supply chain."

...iSuppli now expects that revenue in the fourth quarter will decline by 0.3 percent compared to the third quarter, the first sequential decrease since the market collapse in the fourth quarter of 2008 and first quarter of 2009.

The strongest demand for chips is in data processing where 2 years of slow growth in IT spending is being rectified as data centers upgrade aging equipment before it fails.

Additional data:

- Shipments of mobile PCs—including tablets—continuing to soar in 2010, semiconductor sales to this area will rise by 38.6 percent.

- The second-strongest growth area will be wireless communications, fueled by booming demand for smart phones. Global semiconductor sales to the wireless communications area will rise by 30 percent in 2010.

- Even the lowest-growth markets are expected to generate impressive semiconductor consumption in 2010. Wired communications and consumer electronics will drive semiconductor revenue growth of 25.4 percent and 26.5 percent, respectively, in 2010.

- The hottest items in 2010 will be DRAM, voltage regulators, LEDs, Programmable Logic Devices (PLDs) and data converters. Revenue for each of these products is projected to grow by more than 43 percent in 2010. DRAM will lead the group with 87 percent growth.

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