Semiconductor Revenue To Improve In 2013, IDC Predicts

The tough market conditions of the past year have been highlighted after research firm IDC predicted that worldwide semiconductor revenue for 2012 would edge up less than 1 percent, to reach $304 billion (£186bn).

In its Semiconductor Applications Forecaster, IDC predicts that semiconductor revenue will improve by nearly 5 percent, to $319 billion (£195bn) in 2013, and log a compound annual growth rate (CAGR) of 4.1 percent from 2011 to 2016, reaching $368 billion (£225bn) in 2016.

Negative Pressures

The report listed several factors that negatively affected the semiconductor market, including weakness in PC demand, dynamic RAM and overall memory price deterioration, semiconductor inventory rationalisation, continued global macroeconomic uncertainty from lower global Gross Domestic Product (GDP) growth, a slowdown in China, the Eurozone debt crisis and recession, Japan’s recession, and ongoing fear of fiscal cliff negotiations’ impact on corporations’ IT spending.

Regionally, Japan and Europe continue to be the two weakest regions, according to the report. Although GDP growth has slowed in emerging economies, such as China, India and Brazil, demand for smartphones, tablets and automotive electronics remains strong. In the US, 4G phones, mobile consumer devices like tablets and e-readers, network infrastructure and set-top box deployments are projected to drive a healthy semiconductor growth cycle over the next five years.

Meanwhile, sales of mature devices such as DVD players, DVD recorders, DVD players, portable media players and game consoles are expected to continue to erode.

Semiconductor revenue for the consumer segment will record year-over-year growth of 9.8 percent in 2013 and a 2011 to 2016 CAGR of 6 percent. Meanwhile, semiconductor revenue for the computing industry segment will log year-over-year growth of 1.7 percent for 2013 and show a CAGR of only 1.7 percent for the 2011 to 2016 forecast period.

Smartphone Growth

Semiconductor revenue from mobile PC demand will register 5.5 percent year-over-year growth in 2013, after declining 7.7 percent in 2012, while semiconductor revenue for 4G phones will experience annual growth of 140.1 percent in 2013 and a CAGR of 103.4 percent for 2011 to 2016.

Overall, IDC expects semiconductor inventories to come into balance with demand in the second quarter of 2013 and growth to resume in the second half of 2013.

“We expect lower, but positive global GDP growth in 2013. Semiconductors for smartphones will see healthy revenue growth as appetite for data, multimedia processing and multitasking will drive high-end smartphone demand in developed countries while an ongoing transition to 3G networks will accelerate smartphone adoption in developing regions,” Mali Venkatesan, IDC’s research manager for semiconductors, said. “PC demand will continue to remain in a period of transition next year until more technology and design innovation begin to change the course of demand.”

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Originally published on eWeek.