2011 semiconductor forecast downgraded -- 2 for 1 deal for the industry

SANTA CLARA, USA: The recent difficulties in semiconductor sales and the unusually rapidly declining IC price/performance index are slowing semiconductor equipment demand. As a result, VLSI Research has revised its 2011 and 2012 forecasts for both integrated circuits (ICs) and semiconductor equipment.
Essentially, 2010 has been a 2 for 1 deal for both chips and equipment with two years of growth in one year, resulting in overcapacity and declining chip prices.

IC sales are now expected to increase only 4.4 percent in 2011 to $248.6 billion, while 2012 will accelerate with an IC sales growth rate of 7.9 percent. VLSI Research cites the increasingly difficult pricing environment, resulting from the rapidly increasing production capacity as the major contributor for sluggish sales growth in 2011. This is not only limited to DRAM markets, but also other major IC sectors as well.

VLSI Research has also downgraded the 2011 forecast for semiconductor manufacturing equipment. Equipment sales are expected to decline 5 percent in 2011 to $46.3B. 2012 will bring a recovery to the semiconductor equipment demand as sales are expected to reach $49.7 billion and growth of 7.2 percent.

Semiconductor equipment demand is slowing due to excess supply in DRAM markets and VLSI expects other major segments experience flat year in 2011.Source: VLSIresearch Inc., USA.