Semiconductor revenue forecast gets a trim

Mounting inventories, slowing consumer demand nick expectations, iSuppli says

Despite what had been growing excitement about the semiconductor market this year, one research company is lowering its chip revenue forecast for 2010.

The 2010 global semiconductor revenue forecast today was trimmed back slightly from a previous expectation of 35.1% to 32%, according to iSuppli Corp., which blames slowing consumer demand and rising inventories for the slip.

"There has been a significant slowdown in the second half in consumer demand for some electronic devices, including PCs," said Dale Ford, senior vice president at iSuppli, in a statement. "Meanwhile, inventories have been building throughout the semiconductor supply chain. These factors will conspire to cause a small sequential decline in semiconductor revenue in the fourth quarter."

However, it's not like this is terrible news for the semiconductor industry, which has been growing this year after being rocked by the economic turbulence of the recession.

In May, iSuppli reported that the global chip industry had not only been on a significant upswing since earlier this year, but it was poised to see its highest growth in the past decade.

That news came a few months after industry research firm IDC announced that the chip market was making its way back after the turbulent times of the recession.

However, these prospects were all based on the burgeoning PC market. This past June, iSuppli reported that global PC shipments experienced record growth in the first quarter of this year. Driven by strong sales in Asian markets, the worldwide PC market grew by 22.7% in the first quarter of this year.

Today, though, iSuppli notes those PC sales aren't on the upswing that they were earlier this year. And while that lowered outlook is making semiconductor expectations slide back, this year will still show great growth in the market. Semiconductor sales for mobile PCs including tablets, are expected to rise by 38.6% in 2010. The second strongest growth area is wireless communications, such as smartphones , which is expected to rise by 30%, iSuppli said.

"Despite the reduced outlook, 2010 still will be a year of impressive growth and record-setting revenue for the semiconductor industry," iSuppli reported. "Revenue in 2010 will rise by about $74 billion compared to 2009 and will be almost $28 billion higher than 2007, the previous last peak year for semiconductor revenue. iSuppli now expects that revenue in the fourth quarter will decline by 0.3% compared to the third quarter."

iSuppli also said that largely because of this fourth-quarter dip, worldwide semiconductor revenue in the second half of 2010 will rise by 7.8%, compared to 10.7% in the first half of the year.

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Sharon Gaudin

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