September 3, 2010 – Good news for the semiconductor industry: 2010 is shaping up to be even better than expected.
Bad news for the semiconductor industry: that strength has already peaked, and will leave the market weaker in 2011 for it.
Gartner analyst Bryan Lewis now projects the industry to top $300B in chip sales this year, a 31.5% surge from 2009. Gartner’s June forecast pegged 27.1% growth in chip sales in 2010 to $290B, vs. ~20% growth to $276B it forecast back in February. (The table below shows the new and old forecast numbers through 2014; note the lower numbers for 2011-2012, but picking up in 2013-2014.)
Essentially, the industry can’t keep up with the growth pace it set in the first half of the year, according to Gartner analyst Bryan Lewis. Europe’s credit crisis has eased, but the global economic woes persist, and electronic gadget makers are increasingly cautious, "ready to cut production at the first signs of slowing customer orders," he says.
Three trends to watch:
PCs. The PC supply chain has softened, particularly for consumer PCs; Gartner has lowered its projections for 3Q10 PC production unit growth to "below seasonal," though this is partly offset by surging tablet PC sales.
Mobile phones. Total market growth continues to look better for 2010; smartphones will represent 18% of units and twice that in sales (increasing to 41% and 64% by 2014). ASSPs for phones should grow 13% this year due to intense competition.
Memory. DRAM memory’s dramatic pricing comeback, spurred by initial strength in PCs and supply constraints, will peak in 2010, Lewis predicts, at 82.5% growth to ~$42B. Look for things to slide by 2H11, and a -29% sales decline in 2012. NAND flash memory, though, will maintain a "growth trajectory" through 2013 thanks to demand for smartphones and media tablets, he says.