Semico downgrades 2012 semiconductor industry forecast to 6-8%

August 8, 2012 — Citing continued financial struggles in Europe, an inventory buildup at TSMC, and lower US GDP, Semico revised its 2012 semiconductor industry forecast from 8-10% to 6-8%.

In July, Semico revised its forecast to the lower end — 8.6% — of its original estimate.

The Semico IPI, which indicates semiconductor industry cycles, began to dip in August 2011, signaling a change in semiconductor revenue growth. However, Semico was originally more optimistic than the IPI, due to the belief that there was pent-up demand for PCs from the floods in Thailand and new smartphone, TV and Ultrabook models would increase electronic purchases.

In fact, Europe is still struggling. European banks say they are doing everything they can to save the Euro, but they said the same thing a few months ago. And now with Spain and Italy in trouble, the uncertainty has gone up not down, making everyone cautious about building new products. If banks in Europe fail, US banks will also suffer.

TSMC’s second quarter grew 20%, and Morris Chang says there is now an inventory problem, meaning that today’s wafers are going to end up as product in the third quarter. Inventory buildup means OEMs won’t be ordering as much during the third quarter, and while orders could pick up if the back to school sales are strong, those orders will count in the fourth quarter instead of the third.

Second quarter US GDP growth was 1.5%, smaller than the first quarter, which means consumers are spending less. Gas prices are dropping, which is a mixed bag of news. Good news for consumers, but the lower prices are because of a lower demand due to a retracting economy.

Semico is a semiconductor marketing & consulting research company. Learn more at

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