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Gartner downgrades chip forecast

by Scott Bicheno on 15 September 2011, 17:56

Tags: Gartner (NYSE:IT)

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Chipping away

Despite the fact that people seem to be buying more computing devices than ever, thanks to the mobile device boom, market researcher Gartner now reckons there will be no growth from the semiconductor industry this year, with a final revenue figure of $299 billion.

Having previously forecast growth of 5.1 percent growth this year, Gartner now reckons the chip sector will decline by 0.1 percent. "Three key factors are shaping the short-term outlook: excess inventory, manufacturing overcapacity and slowing demand due to economic weakness," said Bryan Lewis, research VP at Gartner.

"Semiconductor companies' third-quarter guidance is well below seasonal averages. The current guidance by vendors points to flat to down third-quarter growth. Typically, we see guidance for 8 to 9 percent growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated."

So it looks like device-makers have stockpiled semiconductor components in anticipation of healthy demand, only to have their plans dashed by the inability of Western governments to impose even token financial discipline on themselves, and the consequent macroeconomic malaise.

With PCs being the most severely affected sector, DRAM revenue is expected to decline by 26.6 percent this year. In contrast NAND Flash, which provides the storage in mobile devices such as tablets and smarthphones, is expected to grow by around 20 percent.

"2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6 percent to 4.6 percent due to a worsening macroeconomic outlook," said Lewis. "However, the odds of a double-dip U.S. recession continue to rise and are raising fear that sales prospects will deteriorate further."


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