Wednesday, January 30, 2013

Databeans projects modest growth for 2013 semiconductor industry

USA: The global semiconductor market witnessed another flat market for the year 2012 with sluggish demand across all market segments resulting from lingering uncertainties in the global economic situation, particularly in major regional markets such as the US, EU, and China, all of which saw poorer than expected results for the year.

This situation put unavoidable pressure on the semiconductor industries, as poor demand meant that existing chip inventories could not move quickly enough in order to facilitate the building of new inventory.

With that being said, Databeans expects that the year 2013 will see a solid rebound, growing by 7 percent from 2012 totals to reach $313.04 billion in total global sales for the entire 2013 year.  In all market segments supply has managed to better align with demand, which is steadily growing. ASPs across the board, but particularly in memory devices, have stabilized.

The strongest demand is coming from the highly popular consumer and wireless segments, and specifically in the mobile phones and tablet sectors which have provided a big boost to the sales of high value chips such as mobile processors, logic ICs and NAND Flash memory.
When broken down into individual market segments the greatest growth from 2012 to 2013 will take place in the wired communications market which will grow 15 percent and will reach nearly $32.5 billion. This strong growth will mainly result from the continued rollout of infrastructure equipment supporting data centers worldwide. The strongest growth rates are coming from the various countries that make up the Asia Pacific region.

The wireless communications industry is expected to follow with a year over year (Y/Y) growth rate of 9 percent and will reach nearly $79.5 billion in global chip sales for 2013. Specifically, a huge portion of growth will come from China. Heading into 2013, China’s domestic handset OEMs including Lenovo, ZTE, and Huawei will fully target the lower income individuals that make up the vast bulk of China’s consumer base with several series of low-end and mid-range handsets priced at or around 1000 Yuan (or $160).

This move will further increase the prevalence of feature phones in China. It is expected that a similar trend will take place in other emerging markets including India, Southeast Asia, and Central/South America during the next two to three years.

Other market segments that will see modest growth include Automotive, Industrial, and Consumer Electronics (CE), all of which are slated to grow by 6 percent from 2012 to 2013. In the automotive industry growth will be perpetuated by the expanding industries for in-car information, entertainment, mobile integration, increased vehicle safety and efficiency, and new types of propulsion systems. More focus will also be placed on in-car apps and open-source software that will provide automakers with faster, better ways to incorporate advancements into their vehicle systems.

Meanwhile, the traditional CE market will continue be driven by solid demand for home entertainment devices including HDTVs, set-top-boxes, and home audio, all of which are expected to remain major market segments in 2013. Despite weakness in this industry over the past two years, the future is expected to be bright for this industry, driven by major advancements in TV display size and quality, as well as substantial growth in streaming, digital download, and cloud services which allow for a more personalized entertainment experience.

Finally, the weakest growth will be seen in the computer segment, which will grow by just 4 percent in 2013 to $82.5 billion in semiconductor sales. While the traditional desktop and server markets will continue to grow at a slower pace, the market for mobile tablets and laptops will help prop the industry up. The release of Windows 8 OS in the latter half of 2012 is also expected to have an impact here. Specifically, Windows 8 should drive additional high end PC revenue and could also end up pushing tablets into the corporate computing environment, as the OS allows users to do tasks using the Microsoft Office Suite.

While some experts remain cautious about a full-fledged recovery, most indications are signaling a modest return to growth for the overall global economy with improved consumer confidence, easier availability of credit, and lower unemployment rates around the world. Certain regions, including the U.S. and APAC will outperform their counterparts in the EU and Japan. But even with that being said, Databeans fully believes that the semiconductor industry as a whole will see much better results this year and will continue this momentum into the years to come.

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