November 23, 2012 – Growth in the industrial electronics semiconductor market is set to fall short of previous expectations in 2012 as the business is buffeted by weakening global economic conditions, with the LED market the sole bright spot, says IHS iSuppli in an updated report.

In general, revenue for industrial semiconductors — used in a wide array of application markets from home automation to aeronautics and military purposes — is projected to rise just 3% in 2012 to $31.4 billion — that’s less than half than the 7.7% growth forecast back in July. It’s also a meager expansion compared with 2011’s solid 9% increase and the exuberant 35% surge in 2010 immediately after the recession. For the next four years, revenue is set to rise in a range from 7-12% each year, reaching $44.8B by 2016.

Worldwide industrial electronics semiconductor revenue, in US $B. (Source: IHS iSuppli)

"Economic headwinds" started intensifying in 2Q12 and undercut chip revenue forecasts, affecting top semiconductor suppliers and OEMs of industrial electronics, explained Jacobo Carrasco-Heres, industrial electronics analyst at IHS. "And when hoped-for growth did not pan out as expected, and sales eventually came out lower, the market was downgraded to reflect the changed circumstances."

One segment that seems to have remained untouched this year is the robust LED market, thanks to the LED lighting boom that has taken hold in many parts of the world, noted Robbie Galoso, principal analyst for electronics at IHS. Philips enjoyed a 37% climb in LED sales in 2Q12 vs. a year-ago, and other LED lamp suppliers like Cree, LG Innotek, and Samsung LED also enjoyed solid 2Q results.

Industrial semiconductors are used in energy generation and distribution; military and civil aerospace; building and home control; medical electronics; manufacturing and process automation; and the test and measurement segment.