Q2 global semiconductor revenues disappoint

Q2 global semiconductor revenues disappoint

2012 growth rates don’t look good, as global semiconductor revenues fall 3% year-over-year and fail to hit sequential increases that would signal an upward trend

Poor economic conditions hindered growth in the global semiconductor market in the second quarter, causing analysts to predict a less-than-stellar performance in the sector this year.

A new report from IHS iSuppli said global semiconductor market revenue fell 3% year-over-year in the second quarter, to $75.2 million. Revenue increased sequentially, but by less than 3% compared to the typically weak first quarter—short of the 4% threshold that would indicate stronger growth ahead for the year, according to IHS.

“Amid rising economic concerns—including the Eurozone crisis, slowing manufacturing growth in China and stubbornly highly unemployment in the United States—second-quarter growth for the global semiconductor industry was highly disappointing,” said Dale Ford, senior director of electronics and semiconductor research at IHS. “Approximately two-thirds of the world’s semiconductor suppliers saw their revenues decline in the second quarter compared to the same period in 2011. This weak performance bodes ill for the semiconductor industry’s growth prospects for the entire year.”

In 2011, global semiconductor revenue grew by just 1.4%, and the new IHS forecast calls for an even weaker market in 2012.

Although revenue declines hit all regions, Europe and Japan took the brunt of the downturn. Collectively, European semiconductor suppliers’ revenue fell 8% compared to the year-ago period, with two-thirds of all European suppliers experiencing revenue declines in the quarter.  In Japan, collective revenue fell nearly 8% for the quarter, with half of Japanese chip suppliers seeing a decrease in revenue.

But the news isn’t all bad. Two of the world’s top 10 semiconductor suppliers saw double-digit growth during the quarter—Qualcomm grew 24% and Broadcom grew 10%. Samsung also saw better results, growing nearly 6%--boosted by its acquisition of Samsung Electro-Mechanics.

Looking ahead, some analysts are predicting a better long-term outlook for the chip market, especially as demand for wireless devices such as smartphones and tablet computers continues to grow.  An IC Insights report earlier this summer predicted that semiconductor market growth rates will more than double between 2011 and 2016, helped especially by strong growth in the NAND flash memory and DRAM markets.

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