Wireless segment drives semiconductor growth

Global semiconductor market expected to grow a modest 3% this year, driven by anticipated double-digit growth in wireless applications

Wireless applications will lead the way in semiconductor revenue growth this year, pushing the overall market to a modest 3% increase in 2012, a new market outlook report from industry analyst IHS reported this week.

Analysts expect double-digit revenue growth in the wireless segment compared to much lower expansion or losses in other key market segments. Semiconductor revenue for wireless communications is expected to reach $73 billion, up 10% compared to last year. Also driving the expansion is industrial electronics, which is expected to see 8% growth in semiconductor revenue this year. Overall, IHS analysts expect the semiconductor market to grow 3% to $321 billion this year.

“While most markets are struggling with slow growth or declines in 2012, the wireless segment continues to expand at a healthy pace, driven by strong sales gains for smartphones and media tablets,” said Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS. “Because of this, the growth of the semiconductor market in 2012 is not broad-based and is only being driven by wireless. Semiconductor manufacturers should be cautious about engaging in any activities that do not support next-generation wireless applications.”

In comparison to wireless, semiconductor revenue for wired communications is expected to rise less than 1% this year, while consumer electronics and automotive electronics are expected to rise by slightly more than 1% and nearly 3%, respectively. Revenue growth will be negative in at least two categories—data processing and memory multichip packages—falling 2% and 18%, respectively, IHS said.

 

Going forward, the strength and longevity of the growth cycle will depend largely on how well the global economy performs in the rest of 2012, the report concluded.

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