WSTS forecast update: Two more tough years

December 6, 2011 – The WSTS’ newest version of its twice-a-year semiconductor industry outlook shows some softer segments than just six months ago. Bottom line: Hope you enjoyed 2010’s 30% blowout, because the next three years will flatline at low- to mid-single-digit growth.

With 2011 almost in the books, WSTS joins other industry watchers pegging somewhere between 1%-2% total chip sales growth (vs. 5.4% midyear expectation). Technically the industry is poised to top $300B in sales for the first time, but what’ll be remembered is a year of struggles: macroeconomic sluggishness (both individual regions and worldwide e.g. European debt crisis), "clear declines of industrial and consumer confidence," and supply chain disruptions highlighted by disasters in Japan (March 11 quake/tsunami) and Thailand (massive flooding), notes the WSTS in a statement.

By product segment, memory takes the biggest hit in the WSTS updated forecasts, which shave -10% off 2011 sales projections ($60.66B, -13% Y/Y vs. -2.7%) and -15% from 2012 numbers ($57.84B, -4.6% vs. 0.9%), as DRAM oversupplies have put a big hurt on revenues. Only two segments get an upgrade in the WSTS’ new outlook: discretes and opto, which got bumped up ~2% each in 2011.

WSTS’ Autumn 2011 forecast, in US $B and % growth. (Source: WSTS)

Unfortunately the projected uptick in 2012 chip sales growth that the WSTS had projected won’t be materializing either. On top of 2011’s downgrades, the group has lowered its sales growth to 2.6%; back in June it was expected to be 7.6%. Most individual sector growth estimates were in the high single-digits or even low-teens, but now are all at mid-single-digits. That’s an -8.3% overall haircut from the midyear forecast, and -10% or more to ICs, analog, MCU, and memory.

Changes in WSTS’ Autumn 2011 vs. Spring 2011 forecasts.

Looking at the WSTS forecasts divided by region also shows across-the-board downgrades from the midyear estimates, driven by general macroeconomic malaise. Leading the way down is a much gloomier outlook for Europe, thanks to the aforementioned economic instability, slashed to 0% vs. 8% at midyear. Changes in 2012’s outlooks are also harsh, with big cutbacks for the Americas (1.3% vs. 8.6%) and Europe (-2.1% vs. 10.5%), and Asia-Pacific too (3.4% vs. 6%). Even Japan’s rebuilding/restocking is slowing down; the WSTS had expected 10% growth in 2012, now it sees 5.5% (by far the best of the regions).


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