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Worldwide Semiconductor Revenues To Decline 0.1% In 2011: Gartner

Global revenues from sales of semiconductors will shrink marginally to $299 billion in 2011, a decline of 0.1 percent from 2010, according to Gartner, Inc. The research firm had earlier predicted (in the second quarter) that the revenues will grow 5.1 per cent in the current year.

"Three key factors are shaping the short-term outlook: excess inventory, manufacturing overcapacity and slowing demand due to economic weakness," said Bryan Lewis, research vice president at Gartner. "Semiconductor companie's third-quarter guidance is well below seasonal averages. The current guidance by vendors points to flat to down third-quarter growth. Typically, we see guidance for 8 to 9 percent 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."

The PC production unit growth has also significantly decreased. Last quarter, Gartner estimated a PC production growth of 9.5 percent which has now been reduced to 3.4 percent. The firm has also lowered its forecast of the mobile phone production unit growth from a second quarter projection of a 12.9 per cent growth to an 11.5 per cent growth in this most recent outlook.

Additionally, Dynamic random-access memory (DRAM) has been severely impacted by the reduced PC demand and falling prices and is now expected to decline 26.6 per cent in 2011. NAND flash and data processing Application-specific integrated circuit (ASIC) are the fastest-growing device areas in 2011, with about 20 percent growth. This growth is due in part to the strong growth in smartphones and iPads.

"2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6 percent to 4.6 percent due to a worsening macroeconomic outlook," added Lewis.

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