El Segundo, Calif. iSuppli Corp. has upgraded its 2009 semiconductor forecast due to strong second quarter sequential growth, supply chain improvements and semiconductor demand trends. The market researcher now forecasts global chip sales will decline by 16.5 percent in 2009, compared to a 23 percent drop previously projected.
iSuppli’s report, To Grow, You Have to Know the Market, finds that third-quarter semiconductor sales are benefiting from improved market outlooks by major OEMs in key markets such as PCs and mobile handsets.
iSuppli forecasts that global revenue from shipments of electronic equipment will decline by 9 percent in 2009 to $1.39 trillion, down from $1.53 trillion in 2008. Growth will rebound by 5.2 percent in 2010 to reach $1.47 trillion.
“Lack of visibility from the end market and through the electronics supply chain was a major problem for semiconductor suppliers in the first quarter,” said Dale Ford, senior vice president, market intelligence services for iSuppli, in a statement. “However, due to a stabilizing economic environment in the second quarter and improving supply chain visibility, semiconductor shipments rebounded as inventories were replenished and modest forward-looking purchases were made.”
The global economy in the second quarter was boosted by worldwide economic stimulus efforts. Although the American Recovery and Reinvestment Act (ARRA) didn’t go into effect during the period, China’s stimulus efforts spurred a massive increase in consumer purchasing in the country, said iSuppli.
While revenue began growing on a sequential basis in the second quarter of 2009, sales will not begin to increase on a year-to-year basis until May 2010, according to the report. This means the industry will endure 20 months without year-over-year revenue growth, compared to the 17-month downturn that the industry experienced during the 2001-2002 decline, said iSuppli.
iSuppli says while 2010 will bring a return to growth in the semiconductor industry with a 13.8 percent rise compared to 2009, the market won’t return to its 2007, pre-downturn level until 2012. The market researcher estimates that global semiconductor revenue will rise to $282.7 billion in 2012, compared to $273.4 billion in 2007.
In the third quarter, semiconductor suppliers have moved to build inventory to achieve supply and demand equilibrium, and as a result, global chip revenue in the third quarter likely will rise by 3 percent more than actual demand would dictate, creating an artificial bump in sales for the industry, according to iSuppli.
“Having seen their inventories swell to excess in 2008, semiconductor suppliers acted quickly to reduce inventory,” said Carlo Ciriello, financial analyst for iSuppli, in a statement. “However the pendulum swung too far in the opposite direction in the second quarter, leaving inventories at lean levels.”
Despite the below-target semiconductor inventories in the second quarter, there is no danger of chip shortages at this time, reported iSuppli. With global semiconductor factory utilization at extremely low levels, suppliers can easily boost their manufacturing to meet demand, according to the market researcher.