The global semiconductor market is on pace to decrease 0.1% on year to US$299 billion in 2011, according to Gartner. It previously predicted a 5.1% increase.
"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 8-9% growth in the third quarter because of back-to-school and the holiday build."
PC production unit growth has significantly decreased. Gartner estimated in the second quarter that PC production for 2011 would grow 9.5%, which has now been reduced to 3.4%. The firm has also lowered its forecast of mobile phone production unit growth from a second-quarter projection of 12.9% growth to 11.5% growth.
DRAM has been severely impacted by reduced PC demand and falling prices, and is now expected to decline 26.6% in 2011, Gartner indicated. NAND flash and data processing ASIC are the fastest-growing device areas in 2011 with about 20% growth, buoyed by demand for smartphones and iPads, Gartner said.
"2012 is the wild card. We have lowered our 2012 semiconductor forecast from 8.6% to 4.6% due to a worsening macroeconomic outlook," Lewis said. "However, the odds of a double-dip US recession continue to rise and are raising fear that sales prospects will deteriorate further."