Semicon forecast: 2H10 seasonally slower after robust 1H; expect high single digit growth in 2011

FRAMINGHAM, USA: International Data Corp. (IDC) recently published a qualitative summary update to its Semiconductor Application Forecaster (SAF) in which the major semiconductor application segments are reviewed. The new report highlights some of the key trends affecting IDC's semiconductor forecast projections for the remainder of this year and into 2011.

* A recent IT sentiment survey found consistent support among IT Managers to put a high priority on software, PC, storage, networking, and security projects, including a more meaningful upgrade cycle for Windows 7 in 2011.

* Robust growth in sales of mobile phone and connected device chipsets and migration to 802.11n are expected to continue this year, while the planned LTE built out and infrastructure upgrades along with more normal growth patterns for handsets are expected in 2011.

* For 2010, cutbacks in PC orders by PC semiconductor vendors (2H10) are balanced by higher pricing for DRAM and more stable growth in non-PC applications. But, a return to stable progress in segments tied to corporate IT spending is expected for 2011.

* While relatively strong demand for digital televisions (DTVs) and decreased panel pricing are fueling semiconductor sales, continued declines in demand for single-function portable products, which are migrating to smartphones, are negatively impacting semiconductor sales this year and in 2011.

* Increased use of electronics in automobiles, continued increase in passenger vehicle sales in BRIC countries, and continued adoption of M2M connectivity technologies along with emerging market segments such as smart grid are helping semiconductor sales this year and into 2011.

Overall IDC continues to reaffirm the views expressed in its June 2010 forecast. However, IDC also believes that macroeconomic problems, such as persistently high unemployment along with the associated low consumer sentiment in the US, and a commodity-driven asset bubble in BRIC countries, could influence the expected recovery for the remainder of 2010 into early 2011.

"Taking into account the macroeconomic trends, semiconductor supply chain behavior, and secular long-term growth seen in applications such as smartphones, mobile PCs, media tablets, and automotive, IDC expects that semiconductor revenues for 2010 and 2011 could end up one to two percentage points above what was forecasted in June 2010, representing year-over-year growth of 22-24 percent and 8-9 percent, respectively, for 2010 and 2011," said Mali Venkatesan, research manager at IDC, who is leading the study and compiling the SAF data.