IHS DOWNGRADES SEMICONDUCTOR INDUSTRY FORECAST TO 2.3% DECLINE

(The following is a reformatted version of a press release
issued by IHS and received via electronic mail. The release was
confirmed by the sender.) 
IHS Downgrades Semiconductor Industry Market Forecast to 2.3
Percent Decline 
El Segundo, Calif. (Dec. 3, 2012)--Amid increasingly weak
economic conditions that are depressing consumer and business
spending on electronics, IHS is downgrading its forecast for the
global semiconductor market in 2012, with revenue now expected
to decline by 2.3 percent for the year. 
Worldwide chip sales are expected to decrease to $303 billion in
2012, down from $310 billion in 2011, according to preliminary
results from the IHS iSuppli Competitive Landscaping Tool (CLT)
and Application Market Forecast Tool (AMFT) from information and
analytics provider IHS (NYSE: IHS). 
The newly adjusted figure shows a steeper descent compared to
the 0.1 percent retreat first projected in the previous August
AMFT forecast and the 1.7 percent decline forecast in the
September AMFT. Even so, the prognosis remains the same: this
will mark the first annual decline for the global semiconductor
industry since 2009. 
“Five out of the six major application markets for
semiconductors--including the key computer segment--are expected
to contract in 2012, pulling down the overall performance of the
chip market,” said Dale Ford, senior director, electronics and
semiconductor research for IHS. “An extremely weak global
economy resulted in poor demand for electronics. As a result,
the semiconductor industry slipped from stagnation in the first
half of 2012 to a slump in the second half. Still, one of the
few silver linings is that the fourth quarter is expected to
bring a mild recovery in year-over-year growth, setting the
stage for a market rebound in 2013.” 
The attached figure presents the IHS iSuppli AMFT forecast of
global semiconductor revenue. 
Computer crash 
Among the various semiconductor application markets, the data
processing, consumer electronics, industrial, wired
communications and automotive segments all are expected to
deteriorate in 2012, with only the hot wireless segment set to
expand. 
The PC-dominated data processing segment--the largest
semiconductor application market--is on track to plunge by 7.8
percent this year. Global PC shipments will shrink in 2012 for
the first time in 11 years, due to a combination of economic
factors and competition with new platforms, including media
tablets. 
On the other hand, wireless semiconductors will be the only
application market to grow this year. 
“The surge in popularity of smartphones and media tablets is
driving healthy growth in the overall wireless semiconductor
market segment in 2012 with a projected 7.7 percent expansion,”
Ford said. “However, all of the other end markets for
semiconductors will see revenues fall in 2012, negating all the
positive effects of the wireless segment.” 
Quarter pounding 
Both the sequential and year-over-year quarterly increases
throughout 2012 have been very disappointing, with sequential
second- and third-quarter growth amounting to just 2.7 percent
and 3.1 percent, respectively. Only the fourth quarter of 2012
is expected to show year-over-year improvement, with a slight
1.9 percent uptick compared to the fourth quarter of 2011. 
Nonetheless, this slender growth in the fourth quarter could set
the stage for a return to a consistent pattern of expansion in
2013. 
Lucky 2013? 
One year ago IHS predicted that, “Any type of meaningful rebound
in revenue growth is not expected to take place until 2013.” The
IHS iSuppli preliminary AMFT predicts semiconductor revenue will
expand by 8.2 percent in 2013 if the small improvement in
worldwide GDP growth forecast for 2013 holds up. 
Wretched regions 
Three out of the four worldwide regions are on course to suffer
a retreat in semiconductor revenue this year. 
Europe, Middle East and Africa (EMEA) will drop by the greatest
margin of all regions, with a 9.3 percent fall. Japan will
contract at a 4.7 percent rate, while the Americas will decline
by 4.6 percent. 
Shipment of semiconductors to the Asia-Pacific region will grow
barely, up just 0.3 percent. 
Part problems 
Illustrating how widespread semiconductor weakness is this year,
every chip-component segment is set to suffer a revenue decrease
in 2012-- with only four exceptions: CMOS image sensors, light-emitting diodes (LEDs), application-specific logic integrated
circuits (ICs) and sensors. 
CMOS image sensor revenues are forecast to deliver extremely
strong results, with 31.8 percent annual growth. Also, LEDs will
deliver double-digit revenue increases at 17.5 percent.  IHS
likewise estimates that application-specific logic ICs and
sensors will see solid expansion of 5.6 percent and 4.1 percent,
respectively. 
Once again, memory markets are exerting a significant drag on
the semiconductor market with a combined forecast decline of
10.7 percent. Even the typically hot NAND flash memory market
will witness a revenue decline in 2012. 
Discrete component revenues will fare equally as bad as memory,
with revenue falling by 10.6 percent.  Digital signal processors
(DSPs) are expected to suffer the most dramatic reduction, as
revenue in this category plunges 30.9 percent. This is driven
primarily by the withdrawal of Texas Instruments Inc. from the
wireless baseband market. 
For more information, please contact: 
Jonathan Cassell
Senior Manager, Editorial
jonathan.cassell@ihs.com
Direct: +1 408 654 1714
Mobile: +1 408 921 3754 
Or 
IHS Media Relations
press@ihs.com
+1 303 305 8021 
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