According to IHS iSuppli Wednesday research report, the global electronics demand will be impacted by increasing economic woes and rising consumer pessimism. Thus, IHS decides to cut its semiconductor revenue growth forecast for 2011.
Through the lastIHS iSuppli Application Market Forecast Tool (AMFT)TM,the firm predicts semiconductor revenue growth this year will be $313.3 billion, growing 2.9%, which is still higher than last year’s $304.5 billion.
On August 2, IHS iSuppli predicted that the revenue would be increase 4.6%, which is higher than the present forecast.
Vice president of electronics supply chain and semiconductors for IHS, Dale Ford said, “Mounting economic weakness is taking its toll on the worldwide electronics and semiconductor industries just as these markets are entering the critical pre-holiday sales season. While economic challenges have persisted into 2011, consumer spending could have still sustained a reasonable level of growth in electronics demand if conditions had remained reasonably stable. Unfortunately, the accelerating decline and instability of the economy has reasserted itself as the primary driver of tepid electronics and semiconductor revenue growth in 2011. The continuing impact of a weakened and stagnant economy is expected to continue to drag on the semiconductor market in 2012, limiting revenue growth to 3.4 percent.”
During March, the global GDP growth for the year was forecast to be 3.7%. While, starting from summer, the economic environment began to decline, forcing IHS to cut its forecast. In September, the global GDP growth forecast has been decreased to 3.0%.
Additionally, Japan’s earthquake and tsunami severely affected semiconductor revenue in the second quarter. However, currently, the recent demand has some recovery and it is expected to provide a modest second-half boost to the semiconductor market.
Despite the improved situation in Japan, the very real possibility of a global economic recession cannot be ignored. IHS Global Insight forecasts that the possibility for a return to economic recession is high as 40%. If the prediction comes true, the semiconductor market growth will be flat for 2011.
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