iSuppli Slashes FY11 Semi Outlook, Sees Q4 Revs Down 2%

IHS (NYSE: IHS) iSuppli has cut its outlook on semis for the remainder for 2011.

From growth expectations of 2.9 percent issued in September, iSuppli now sees semis growing only 1.2 percent over 2010.

For the third=quarter, revenue for chips increased 3.5 percent, below forecasts calling for a 4.8 percent increase issued in September, but now means an increase in revenue for 2011 has been "salvaged."

Due to deteriorating economic conditions, fourth-quarter revenue is expected to drop by 2 percent, compared with the third quarter. According to iSuppli, "Many major semiconductor suppliers are projecting fourth-quarter revenue declines that average in the high single digits. However, a number of major semiconductor suppliers — such as Intel (Nasdaq: INTC), Samsung, Renesas, Qualcomm (Nasdaq: QCOM) and Advanced Micro Devices (NYSE: AMD) — have projected solid growth in the fourth quarter that will limit the overall market decline. In order for the full year of 2011 to wind up in negative territory, overall semiconductor revenue would have to fall by 7 percent or more in the fourth quarter."

Bright spots include microprocessors, image sensors, and NAND flash memory, with each segment expected to grow 15 percent. At the other end, RAM, SRAM, NOR Flash memory, and digital signal processors, will see a 15 percent decline in revs.

Looking to 2012, iSuppli sees 3.2 percent in chip growth, and doesn't expect a real rebound until 2013. The firm commented, "Tepid growth in electronics OEM revenues of only 6.5 percent is expected in 2012. Rising downward price pressures due to an imbalance between supply and demand and higher inventory levels will combine with weak economic conditions to limit any growth in semiconductor revenue to the low single digits in 2012."

Semiconductor HOLDRS (NYSE: SMH) is 4.2 percent lower on the session, mostly led by Applied Materials (Nasdaq: AMAT) following it's fourth-quarter earnings report and outlook.

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