Mid-year economic slump in US will keep chip sales growth at 11.2 percent

Dr. Robert Castellano, The Information Network.

NEW TRIPOLI, USA: Our US weekly leading economic indicators are pointing to a weakening of the US economy in mid-2010 resulting in a slowdown in semiconductor revenues. Personal consumption will remain sluggish in the second half of 2010 because of a jobless recovery, further deterioration in credit, and continued weakness in home prices.

Our US weakly leading indicator forecasts economic conditions approximately six months in the future.“The US is the largest consumer electronics market,” noted Dr. Robert Castellano, president of The Information Network. “In 2009, 20 percent of the global consumer electronics revenue came from purchases in the US, followed by Western Europe with 19 percent. Weak consumer demand in 2010 will translate to weak chip sales.”

Semiconductor revenues will grow 11.2 percent in 2010 to $245 billion, up from $220 billion in 2009.

Lower chip sales will also impact capex. Forecasts are pointing to global capex growing more than 50 percent in 2010. With the slowdown in chip sales, semiconductor manufacturers will reduce capex to the 20 percent range.Europe’s recovery lags other large regions and prospects for the retail and consumer goods sector and for the automotive industry remain poor. Weak domestic demand will constrain growth in the second half of 2010.