Semico cuts IC forecast, sees 2% decline for year

Dylan McGrath SAN FRANCISCO—Semiconductor market watcher Semico Research Corp. Friday (Sept. 2) cut its 2011 semiconductor industry forecast, saying it now expects chip sales to decline 2 percent compared to 2010.  The move by Semico (Phoenix) could be the most troubling indication…

Dylan McGrath

SAN FRANCISCO—Semiconductor market watcher Semico Research Corp. Friday (Sept. 2) cut its 2011 semiconductor industry forecast, saying it now expects chip sales to decline 2 percent compared to 2010. 


The move by Semico (Phoenix) could be the most troubling indication yet that the 2011 chip market has taken a turn for the worse. A number of chip and related companies have in recent weeks warned of murky second half business conditions.
Semico had previously forecast that the chip market would grow by 6 percent in 2011. The most recent forecasts by other market research firms are generally around 6 percent or higher.Jim Feldhan, Semico president, said in an interview with EE Times that the firm revised its forecast after meetings with customers and other signs pointed to a lack of momentum for the chip market in the second half of the year. Feldhan noted that some people still believe that the industry will enjoy single-digit growth in 2011 on the strength of a strong fourth quarter. Feldhan said that possibility “doesn’t seem very realistic.”Earlier Friday, the Semiconductor Industry Association reported that he three-month average of worldwide sales of semiconductors was $24.85 billion in July, down 1.1 percent from July 2010. The figures were roughly in-line with predictions by analysts Bruce Diesen and Mike Cowan. The SIA also reported signs of a recovery in the Japanese market.

Semico said the chip market is currently experiencing the result of excess build-out in media tablets, PCs, and smartphones. General economic indicators continue to point to slower economic expansion for the balance of 2011, the firm noted.

Last month, IC Insights Inc. lowered its semiconductor industry growth forecast for the year to 5 percent from 10 percent. In June, Gartner Inc. lowered its chip forecast for the year to 5.1 percent growth from 6.2 percent.  Earlier this week,Semiconductor Intelligence LLC lowered its forecast for the year to 4 percent growth from 9 percent.

In its most recent forecast, IHS iSuppli in June raised its outlook for the chip market to 7.2 percent growth, up from an earlier forecast of 7 percent.