iSuppli cuts chip and electronic equipment forecasts; projects rebound in second half

El Segundo, Calif. — iSuppli Corp. has cut its forecasts for global semiconductor and electronic equipment revenue amid lingering economic woes and continuing poor visibility.

iSuppli’s latest report, 2009: U-Shape, V-Shape or Double Dip?, forecasts that the worldwide global semiconductor revenue will fall to $198.9 billion in 2009, down 23 percent from $258.5 billion in 2008.

“The global economy and technology industry have undergone a period of uncertainty and volatility,” said Dale Ford, senior vice president, market intelligence services, for iSuppli, in a statement. “With technology companies downgrading their forecasts, and with little visibility into future demand trends, conditions appear to be worse than previously expected in 2009.”

The major reason for the downgrade is the automotive sector, although all electronics segments are expected to suffer contractions in 2009. iSuppli has cut its 2009 automotive electronics forecast to $75.2 billion, down 24.4 percent from $99.6 billion in 2008, which is down 3.8 percent from the previous forecast, stated Ford.

iSuppli also downgraded five major electronic equipment categories — data processing, wired communications, wireless communications, consumer and industrial. All sectors had their growth forecasts revised downward by rates ranging from less than 1 percent to nearly 6 percent, reflecting overall technology market turbulence and lack of visibility.



As a result of a weakening electronic equipment market, iSuppli also cut back its semiconductor forecast. Yet, the market researcher says conditions are looking up for both semiconductors and electronic equipment at the start of the second half of the year.

iSuppli says the semiconductor industry in the first quarter was severely impacted by Japanese chipmakers, which experienced a severe decline in production during the period. Japan’s semiconductor makers now have reduced their excess inventories and have resumed production, said the market researcher.

After a 7.1 sequential increase in the second quarter, iSuppli predicts global semiconductor revenue will rise by 10.4 percent in the third quarter and by 4.9 percent in the fourth.

Following a 19.4 percent plunge in the first quarter, global electronic equipment revenue rose by 1.9 percent in the second quarter and will increase by 10.4 percent in the third and by 8.9 percent in the fourth.

While these sequential increases won’t be enough to generate annual revenue growth for chips or electronic products, they likely will pave the way for a better year in 2010, said iSuppli.