Economic issues to hurt semiconductor revenue, IDC says

After a market rebound last year, semiconductor companies could face another round of economic uncertainty

Worldwide semiconductor revenue will grow at a slower rate next year, hurt by an uncertain economy in developed and emerging markets, research firm IDC said on Thursday.

IDC projected worldwide semiconductor revenue to grow by just 5 percent in 2012 compared to this year. IDC is projecting semiconductor revenue to be US$303 billion this year, growing by 9 percent compared to 2010.

Semiconductor companies were rocked by the recession in 2009 and underwent a correction last year after worldwide revenue grew by 24 percent following the economic rebound. But semiconductor revenue could be hurt again by high unemployment in the U.S, economic struggles in Europe and fear of inflation in the emerging markets of China, India and Brazil, said Mali Venkatesan, semiconductor research manager at IDC, in a statement.

The modest revenue growth next year will be driven by growing sales of smartphones, tablets, set-top boxes and infotainment systems, IDC said. Many of these systems are equipped with processors from Intel, MIPS and ARM.

Modest growth in PC sales will also contribute to semiconductor revenue growth next year, IDC said. Laptops with new chips from Intel and Advanced Micro Devices have driven the corporate refresh cycle, and companies are continuing to buy new PCs with Microsoft's Windows 7 OS. The PC segment accounts for 40 percent of all semiconductor revenue, IDC said.

Overall PC shipments slowed in this year's second quarter as consumers tightened wallets and interest in tablets grew, IDC said earlier this month. Worldwide PC shipments totaled 84.4 million units in the second quarter, growing by just 2.6 percent compared to the same quarter a year earlier. IDC is projecting shipments to stabilize in the third and fourth quarters, and Intel CEO Paul Otellini on Wednesday said the PC market will grow at an 8 percent rate for the rest of the year, despite the encroachment of tablets into laptop sales.

IDC tracks more than 100 semiconductor companies as part of its revenue projections.

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Agam Shah

IDG News Service
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