Semiconductor industry to recover this year

Mobile devices will drive semiconductor revenue this year after a rough 2012

Increased sales of electronics and new forms of computing devices will drive the worldwide semiconductor market to growth this year after a slowdown in 2012, the nonprofit organization World Semiconductor Trade Statistics said on Monday.

Semiconductor revenue this year will grow by 4.5 percent compared to 2012, in which yearly revenue was US$290 billion. Last year's revenue dropped by 3.2 percent compared to 2011, primarily due to a challenging global economy and a slowdown in the Chinese market.

Semiconductors provide the base for computing and are used in a range of products including PCs, smartphones, tablets, cars and medical devices. Semiconductor demand over the past few years has been closely tied to the supply and demand of products, with more product purchases helping semiconductor sales grow.

The Semiconductor Industry Association, which represents semiconductor companies in the U.S., also said the semiconductor market is poised to rebound next year. SIA in a study said the global semiconductor market revenue declined by 2.7 percent in 2012 compared to 2011, and also said that the market is poised to grow in 2013 as economies stabilize.

WSTS in November projected growth for all semiconductor segments in 2013 after a rough 2012. The only major growth market in 2012 was optoelectronics, which is tied to equipment around optics, and logic, which enables functions on a chip. WSTS projected that optoelectronics revenue would grow by 6.9 percent and logic would grow by 2.2 percent. Global revenue for semiconductor segments like analog and memory declined in 2012.

However, sub-segments within memory such as NAND flash did well as smartphone shipments grew at a fast clip in 2012, SIA said. SIA estimated NAND flash sales to be $25.4 billion in 2012, growing by 4.1 percent compared to 2011.

PCs are the main driver of semiconductor sales, and laptop and desktop shipments fell in 2012 for the first time in more than a decade. That was one reason for the slide in global semiconductor revenue in 2012, said Nathan Brookwood, principal analyst at Insight 64.

PC shipments dropped by 3.2 percent in 2012 compared to 2011, IDC said in early January. The PC market was hurt by the growth of alternate computing devices such as smartphones and tablets, which require less memory and fewer semiconductors.

Mobile devices will continue to drive semiconductor revenue growth this year, Brookwood said. A large number of smartphones use semiconductors like NAND flash and sensors for location and orientation.

Game consoles could also drive semiconductor sales, Brookwood said. Nintendo earlier this year launched the Wii U gaming console, and Sony is expected to ship a new gaming console later this year.

While WSTS and SIA have upbeat outlooks for semiconductor sales this year, the organizations cautioned that issues tied to the economy in U.S. and Europe could derail growth.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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