Research firm iSuppli said a tougher-than-expected first half of 2009 led it to downgrade its revenue projections for the electronic equipment and semiconductor industries. However, like other analyst firms, including Forrester and Gartner, iSuppli is seeing positive signs for the second half of 2009 that could bode well for a better 2010.
The semiconductor and electronics equipment sectors are the latest to see growth projections lowered.
Research firm iSuppli is predicting that both areas will see revenue
declines in 2009 be steeper than initially projected, thanks in large
part to the woes of the struggling auto industry.
However, they also said that both markets could see a stronger second half to 2009 and revenue growth next year.
In a report issued July 8, iSuppli analysts say they expect
worldwide revenue for electronic equipment to fall 9.8 percent in 2009,
from $1.53 trillion in 2008 to $1.38 trillion this year. iSuppli in
April predicted a 7.6 percent drop.
For the semiconductor market, the research firm is projecting that
revenue will decline by 23 percent-from $258.5 billion in 2008 to
$198.9 billion this year. iSuppli's April forecast called for a 21.5
"The global economy and technology industry have undergone a period
of uncertainty and volatility," iSuppli analyst Dale Ford said in a
statement. "With technology companies downgrading their forecasts, and
with little visibility into future demand trends, conditions appear to
be worse than previously expected in 2009."
The troubled auto industry was the key sector that led iSuppli to
downgrade its projections. The firm is calling a 24.4 percent drop in
automotive electronics revenue, from $99.6 billion in 2008 to $75.2
billion this year.
"The decline of worldwide automobile sales, particularly in North
America, has had a major impact on overall electronic equipment
shipments," Ford said.
The slower outlook for the electronic equipment industry led to iSuppli's downward forecast for the semiconductor space.
Other analyst firms have also cut their projections for IT spending
for 2009, thanks in large part to a first half of the year that was
more difficult than expected. However, some, such as iSuppli, are
seeing conditions that could lead to an uptick in the second half.
July 7 said global IT spending will drop 6 percent for the year, more than the 3.8 percent they predicted in January.
Likewise, Forrester Research analyst Andrew Bartels said in a June 29 report
first two quarters were even more brutal than anticipated, leading him
to project that worldwide purchases of IT goods and services by
businesses and governments will decline by 10.6 percent, not the 3
percent Forrester had called for earlier in 2009.
However, Bartels expected the IT industry to bottom out in the third
quarter, and that the harsher first half of the year could result in a
faster and steeper rebound starting in the second half and spilling
over into 2010.
iSuppli is seeing the same thing. Ford said that despite the harsh
first half of the year, semiconductor vendors were showing optimism for
the rest of the year. iSuppli is predicting sequential growth in global
semiconductor revenues of 10.4 percent and 4.9 percent in the third and
fourth quarters, respectively.
Those sequential growth numbers won't lead to overall revenue increases for 2009, they could portend an improved 2010.
"iSuppli is projecting the semiconductor industry will show
improvements beginning in the fourth quarter of 2009, which will
provide the basis for overall growth of 13.1 percent in 2010," Ford
said. "Global electronic equipment revenue also will rise by 4.9
percent in 2010."