Zacks Industry Outlook Highlights: Intel, Texas Instruments, Qualcomm,
STMicroelectronics and Micron Technology
CHICAGO, Jan. 3, 2013
CHICAGO, Jan. 3, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Semiconductors, including Intel (Nasdaq:INTC), Texas Instruments
(Nasdaq:TXN), Qualcomm (Nasdaq:QCOM), STMicroelectronics (NYSE:STM) and Micron
A synopsis of today's Industry Outlook is presented below. The full article
can be read at
A number of factors, in combination, are bringing about a complete turnaround
in the computing market. The near-term outlook is bleak for semiconductor
manufacturers, with IHS iSuppli expecting sales to decline 1.9% this year. The
negatives (tablet cannibalization, weaker-than-expected spending by both
consumers and enterprises) are outweighing the positives (cloud computing,
Windows 8) for now but things are expected to get better next year.
Emerging Markets, such as China, India, Brazil and Russia remain a positive
for sector growth. However, this growth is coming at the cost of profits
because of poorer purchasing power in these regions. Additionally, the macro
weakness in developed regions is also impacting certain emerging markets.
With ultra-portable computing devices gaining popularity, the distinction
between consumer and computing markets is blurring in some cases. Of course,
the consumer electronics market also includes other gadgets such as LCD TVs,
Blu-ray players and smartphones.
The Consumer Electronics Association ("CEA") expects global consumer
electronics sales to be up 5.9% this year, driven by growth in tablets (up 83%
from 2011), smartphones (up 24%), networked-enabled TVs (20%) and 3D-enabled
displays (75%). A growing number of consumer electronic devices are now being
sold into /factory-installed on automobiles.
IHS iSuppli is very positive about semiconductor sales into the communications
market and expects both the wireless and wireline segments to make a positive
contribution. Wireless is expected to be the stronger of the two, increasing
10.4%, with wireline relatively flat at 0.7%. Increasing data volumes across
the world and infrastructure build-outs in emerging regions are positive
Industrial consumption of semiconductors is expected to be one of the
strongest this year, driven by the need for production efficiencies, which in
turn is increasing demand for power management semiconductor solutions. IHS
iSuppli expects semiconductors for industrial applications to be up 7.7% this
year, just slightly short of the 9.3% growth in 2011. Medical Devices
(normally included in this segment) is an emerging area where semiconductor
usage continues to increase.
The automotive end market is an emerging area for semiconductors. The growing
electronic content within this market is a secular trend, as demand for
safety, infotainment, navigation and fuel efficiency continue to increase. As
a result, semiconductors serving this market should grow stronger than the
industry over the next few years, although, we may see some changes in days to
come, since nearly a fifth of vehicle production has moved to China and we may
expect more to follow.
While 2012 started off well, conditions deteriorated for suppliers somewhat
because of the protracted weakness in Europe and sluggish recovery in the U.S.
Therefore, IHS iSuppli expects the market to grow just 2.7% for the full year,
down from the 10.0% growth recorded in 2011.
The aerospace and defense markets are considerably dependent on government
spending and policy making. The commercial aerospace market (which lags an
economic downturn or recovery) has started looking up. Production increases
should be slightly positive for the semiconductor industry this year.
The outlook for defense spending on the other hand is not encouraging, with
focus remaining on intelligence systems and basic weaponry. Electronic
weaponry remains a bright spot. So semiconductor manufacturers serving these
markets continue to see mixed results, depending on the customers served.
Forecast for the Full Year
Semiconductor sales in the first half of 2012 remained below the level
generated in the first half of 2011.
Overall, Semiconductor Industry Association (SIA) projections (based on WSTS
data) places worldwide semiconductor sales growth at 0.4% in 2012 and 7.2% in
2013. The Americas region is expected to be up 3.2% in 2012, Japan 1.7%,
Asia/Pacific 0.1% and Europe down 3.5%.
IHS iSuppi is even more negative about growth this year, expecting the PC
market slowdown to result in a 0.1% decline in global sales.
The major players in the industry may be categorized into chipmakers
(OEMs-whether fabless or otherwise), equipment and material suppliers and
According to estimates from IHS iSuppli, Intel (Nasdaq:INTC) and Samsung
remained the top two semiconductor suppliers in 2011, while Texas Instruments
(Nasdaq:TXN) overtook Toshiba Corp. to attain the number three position
(helped by the National Semiconductor acquisition).
Renesas remained at number 5, followed by Qualcomm (Nasdaq:QCOM), which moved
up from the ninth position in 2010. STMicroelectronics (NYSE:STM) remained at
number 7, with Hynix and Micron Technology (Nasdaq:MU) is eighth.
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