Components | June 23, 2011

The Die-Hard semiconductor market

Showing remarkable resilience in the face of the Japan disaster and uncertain economic conditions, the global semiconductor industry in 2011 is expected to expand by 7.2% because of soaring sales of popular consumer products like tablets and smart phones, states iSuppli.
Global semiconductor revenue in 2011 is projected to amount to USD 325.9 billion, up from USD 304.1 billion in 2010, according to a newly revised forecast. The previous IHS iSuppli outlook issued in April predicted revenue would rise by 7% for the year.

The healthy rise in 2011 comes on the heels of the torrid 32.2% increase in 2010 when the market rebounded from the recession-driven downturn of 2009. Following the 7.2% increase in 2011, growth will then moderate during the following two years, rising by 4.8 and 4.0%, before accelerating to 8.0% and 7.5% expansions during the next two years.

By 2015, semiconductor revenue will reach a milestone when it tops the USD 400 billion mark and hits USD 411.8 billion, equating to a compound annual growth rate of 6.3% between 2010 and 2015.

The year’s strongest performers in semiconductors, spurred by consumer demand

The strongest semiconductor demand growth in 2011 will be driven by the wireless and mobile segments, led by the proliferation and high demand for devices such as media tablets, smart phones, e-book readers, solid state drives and handheld video game players. Because of this, wireless communications will generate the strongest increase in semiconductor revenue of all chip application markets in 2011, with a 17.6% increase.

Despite the popularity of tablets such as Apple Inc.’s iPad, mobile PCs also will be a healthy contributor to semiconductor growth this year. This will help make the data processing category the third-fastest growing semiconductor application market in 2011, with growth of 6.2%.

The much smaller industrial electronics segment will be the second-fastest growing semiconductor application market, with revenue rising by 7.3%. Sectors achieving slower expansion this year will include consumer electronics at 3.1% and automotive electronics at 3.0%.

In contrast, semiconductor revenue this year for wired communications is anticipated to contract by 1.7%, the only sector to suffer negative growth, IHS iSuppli research shows.

Economic concerns

Although doubts and worries persist on the state of the world economy, the semiconductor industry is performing well against all odds, Dale Ford, senior vice president for semiconductor market intelligence at IHS observed, even on a quarterly basis. For instance, revenue in the first quarter this year declined only 1.4% compared to the fourth quarter of 2010. This represented the smallest sequential decrease since 2006 during what is normally the slowest season of the year for chip sales.

Sequential growth is anticipated to return for the rest of the year, with revenue rising by 2.9% in the second quarter and by 7.4% in the third.

Image sensors lead market growth

The fastest-growing semiconductor product segments in 2011 will be image sensors, NAND flash memory, light-emitting diodes, microprocessors, discrete components, sensors and general-purpose analog integrated circuits. Collective revenue from these products is projected to rise by more than 12% in 2011, with complementary metal-oxide semiconductor (CMOS) image sensors leading all products with 36% growth.
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