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Global semicon revenues set to dip

Revenue for worldwide semiconductor market in 2011 set for slight decline due to factors including supply chain slowdown and excess inventory, Gartner predicts in new report.
Written by Liau Yun Qing, Journalist on

In a revised forecast, Gartner said global semiconductor revenues for 2011 will decline compared with last year while 2012 is set to be a "wild card" for the industry.

The worldwide semiconductor revenue for 2011 has slowed and is expected to reach US$299 billion, a drop of 0.1 percent compared with 2010, the research firm said Thursday in a report. It had previously projected a year-on-year growth of 5.1 percent.

In the report, Bryan Lewis, research vice president at Gartner, pointed to three key factors affecting the short-term outlook of the industry: excess inventory, manufacturing over-capacity and slowing demand due to economic weakness.

According to Lewis, this year's third-quarter guidance from semiconductor vendors is flat or negative growth--well below seasonal averages. The usual guidance for this period is 8 to 9 percent growth, driven by back-to-school and holiday build, he said.

"The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated," he added.

Next year is a "wild card" for the semiconductor industry, said Lewis. Gartner has lowered its 2012 semiconductor forecast from 8.6 percent to 4.6 percent due to a worsening macroeconomic outlook, he explained.

"However, the odds of a double-dip U.S. recession continue to rise and are raising fear that sales prospects will deteriorate further," he said.

DRAM falls; NAND flash, ASIC up
Zooming into different semiconductor segments, Gartner reported that this year's DRAM (dynamic random access memory) chip sales have been severely impacted by reduced PC demand and falling prices. DRAM revenues are expected to decline 26.6 percent in 2011, it noted.

Last week, the research firm lowered this year's growth projection for the global PC market, from 9.3 percent to 3.8 percent. The reason is the downgraded forecast for Western Europe and the U.S. in the second half of this year, it noted.

A silver lining amid the gloomy forecast is the NAND flash and data processing ASIC (application-specific integrated circuit) categories. Gartner highlighted these two as the fastest-growing areas in 2011, with about 20 percent growth year on year.

The research firm noted that the growth is driven in part by strong sales of smartphones and Apple's iPad.

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