Semiconductor Sales Growth Slowing
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Revenue growth for the second quarter will come at slower pace in 2010 than previously forecasted by research firm iSuppli Corp., due to slowing consumer demand and rising inventories, according to a report on Thursday.
The firm sees global semiconductor sales to now be up 32 percent to $302 billion in 2010, down from a previous estimate of 35.1 percent growth. Global semiconductor revenue in the 2009 was $228 billion.
The firm noted that despite the downwardly revised outlook, this year will still see record-setting revenue for the industry. Revenue for the sector will be $28 billion higher than the previous high set in 2007, according to iSuppli.
"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. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter."
For the fourth quarter, iSuppli now predicts that fourth quarter revenue for the semiconductor industry will decline by 0.3 percent compared to the third quarter, which would mark the first quarter of sequential decline since the onset of the economic recession.
The firm sees the data processing area and wireless communications driving demand for semiconductors this year, on the strength of mobile PCs and smartphones. The semiconductor sales for wireless communication are expected by iSuppli to rise 30 percent in 2010.
"Unstable economic conditions and worrisome market reports continue to create an environment of poor visibility and ongoing uncertainty in the electronics industry,” Ford said. “This has led to frequently expressed concerns regarding a potential double-dip downturn in both the overall economy and in the electronics and semiconductor industries. However, based on its most recent analysis of the electronics supply chain, iSuppli expects the chip business to experience a soft landing in 2011 and not to suffer the kind of dramatic downturn seen in 2009."
The firm predicts that global semiconductor sales will rise 5.1 percent in 2011.
Related ETFs: (NYSE: SMH)
The firm sees global semiconductor sales to now be up 32 percent to $302 billion in 2010, down from a previous estimate of 35.1 percent growth. Global semiconductor revenue in the 2009 was $228 billion.
The firm noted that despite the downwardly revised outlook, this year will still see record-setting revenue for the industry. Revenue for the sector will be $28 billion higher than the previous high set in 2007, according to iSuppli.
"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. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter."
For the fourth quarter, iSuppli now predicts that fourth quarter revenue for the semiconductor industry will decline by 0.3 percent compared to the third quarter, which would mark the first quarter of sequential decline since the onset of the economic recession.
The firm sees the data processing area and wireless communications driving demand for semiconductors this year, on the strength of mobile PCs and smartphones. The semiconductor sales for wireless communication are expected by iSuppli to rise 30 percent in 2010.
"Unstable economic conditions and worrisome market reports continue to create an environment of poor visibility and ongoing uncertainty in the electronics industry,” Ford said. “This has led to frequently expressed concerns regarding a potential double-dip downturn in both the overall economy and in the electronics and semiconductor industries. However, based on its most recent analysis of the electronics supply chain, iSuppli expects the chip business to experience a soft landing in 2011 and not to suffer the kind of dramatic downturn seen in 2009."
The firm predicts that global semiconductor sales will rise 5.1 percent in 2011.
Related ETFs: (NYSE: SMH)
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