Worldwide semiconductor revenue has slowed this year, and the market is on pace to have revenue total $299bn, a decline of 0.1pc from 2010, according to Gartner, Inc. This outlook is down from Gartner’s previous projection in the second quarter for 5.1pc growth this year.
Excess inventory, manufacturing overcapacity and slowing demand due to economic weakness are shaping the short-term outlook, said Bryan Lewis, research vice-president at Gartner.
"Semiconductor companies’ third-quarter guidance is well below seasonal averages," Lewis said. "The current guidance by vendors points to flat to down third-quarter growth. Typically, we see guidance for 8-9pc growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated."
Outlook in production units
PC production unit growth has decreased. Last quarter, Gartner estimated PC production growth of 9.5pc; that has now been reduced to 3.4pc.
Gartner has also lowered its forecast of mobile phone production unit growth from a second-quarter projection of 12.9pc growth to 11.5pc growth in this most recent outlook.
Falling prices and reduced demand for PCs have had a severe impact on DRAM, which is now expected to decrease 26.6pc in 2011.
Other segments are indicating growth, however. NAND flash and data processing ASIC are the fastest-growing device areas this year, with about 20pc growth. This growth is due in part to the strong growth in smartphones and iPads.
"(The year) 2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6pc to 4.6pc due to a worsening macroeconomic outlook," Lewis said.
"However, the odds of a double-dip US recession continue to rise and are raising fear that sales prospects will deteriorate further. Gartner is closely monitoring IT and consumer sales trends for any significant signs of weakness."