Gartner cuts 2012, 2013 chip market growth forecasts

Jessie Shen, DIGITIMES, Taipei [Friday 14 December 2012]

Gartner has revised downward its growth projections for the global semiconductor market growth in 2012 and 2013, citing "economic headwinds and an inventory correction."

Worldwide semiconductor revenues are projected to total US$311 billion in 2013, up 4.5% on year, according to Gartner. The research firm previously estimated 2013 chip market revenues at US$330 million.

Gartner also reduced its forecast for the 2012 semiconductor market to US$298 billion from the US$309 billion predicted previously. The revised figure shows a 3% decrease from the revenues posted in 2011, compared to the previously-estimated increase of 0.6%.

"The looming fiscal cliff, ongoing European debt crisis, slower emerging market growth and regional tensions have all played a part in reduced growth projections for semiconductor revenue in both 2012 and 2013," said Peter Middleton, principal analyst at Gartner. "Inventory levels were already high at the start of the second half of 2012, and as PC demand rolled off, supply simply overshot demand."

The semiconductor market was further depressed when DRAM prices failed to rebound in 2012, Gartner pointed out. The DRAM market is unlikely to recover until the second half of 2013, when lower supply growth will pull the market into a period of undersupply, Gartner said. This should prove a turning point for the semiconductor industry; memory is expected to lead the recovery with 15.3% growth and total semiconductor revenues are projected to reach US$342 billion in 2014, an increase of 9.9% from 2013, Gartner indicated.

The "Apple effect" is expected to remain pronounced in 2013, helping drive strong NAND and ASIC revenue growth of 17.2% and 9.4%, respectively. Gartner counts the A4, A5 and A6 application processors from Apple as ASICs, because these are custom processors, designed and solely used by Apple. ASICs will also benefit from the new generation of games consoles being introduced in late 2012 and 2013.

PC production will decline 2.5% in 2012, according to Gartner. In 2013, total PC production is expected to remain weak; however, ultra-mobile PCs will grow strongly off a small base. The challenging economic environment has contributed to PC life-cycle extension, in addition to users extending the life of their PCs as they adopt tablets.

Mobile phone production growth in 2012 and 2013 is predicted to soften overall as the tough economy reduces short-term demand for phones, Gartner said. However, the forecast for utility/basic smartphones has been increased, largely at the expense of traditional phones. In particular, adoption of Android-based entry-level smartphones in emerging regions continues to accelerate and will be a key growth driver. Worldwide smartphone unit production growth in 2013 is forecast to be 33%, Gartner noted.

Tablet production is also forecast to grow in 2013, rising 38.5% to 207.1 million units, up from Gartner's previous forecast of 169.8 million units. The success of the Amazon Kindle Fire, Google Nexus 7 and Apple iPad mini illustrate the large opportunity for smaller tablets at the right price, while the white-box tablet market is stronger than anticipated, boosting the overall forecast