SIA is Latest Group to See Slowing in Semiconductor Sales

The SIA says that revenue in the semiconductor industry in August increased 0.7 percent over July, noting strong demand for tablets and PCs but lower demand elsewhere.

The Semiconductor Industry Association, the latest group to cast a pall on the market, said that demand for tablets and PCs is offset by slowing demand in other areas.

In a report released Oct. 3, the SIA said that in August, worldwide sales of semiconductors edged up to $25.03 billion, an increase of 0.7 percent over the July level and 2.2 percent more than they were in the same month in 2010.

"Sales in August were, in large part, driven by strong demand in tablets and PCs," SIA President Brian Toohey said in a statement. "Growth in these areas is encouraging. However, lower consumer and industrial demand across a wide range of products and markets is keeping overall sales lower than expected at this point."

The continuing recovery of the semiconductor industry in Japan, which was hurt by the earthquakes and tsunami that struck the country in March, buoyed the August numbers. In addition, SIA officials said the increasing number of semiconductors used in car systems has pushed the market for application-specific semiconductors to double-digit growth, creating a picture for the overall semiconductor market that the SIA labeled "promising" despite the uncertain global economic picture.

The SIA numbers come on the heels of other analyst reports pointing to a slowdown in the global semiconductor space, with most firms blaming the weak economy-particularly in the United States and Europe-and reduced consumer demand for electronics.

Market research firm IHS iSuppli on Sept. 21 said semiconductor revenue would grow an "anemic" 2.9 percent to $313.3 billion this year. This reflects a reduction from IHS iSuppli's earlier projection of 4.6 percent growth for this year.

"Mounting economic weakness is taking its toll on the worldwide electronics and semiconductor industries, just as these markets are entering the critical preholiday sales season," Dale Ford, vice president of electronics supply chain and semiconductors for IHS iSuppli, said in a statement at the time. "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."

A week earlier, Gartner analysts reduced their revenue estimates for the semiconductor industry for both 2011 and 2012. Slowing demand for PCs and other consumer devices, driven by the difficult economic picture, was the key culprit. Gartner analysts now forecast worldwide semiconductor revenue for 2011 to amount to $299 billion, a dip of 0.1 percent from the 2010 total. In the second quarter, they had predicted 5.1 percent growth for this year. The downgraded forecast comes during the third quarter, which historically has been a strong one for the industry, according to Bryan Lewis, research vice president at Gartner.

"Semiconductor companies' third-quarter guidance is well below seasonal averages," Lewis said in a statement. "The current guidance by vendors points to flat-to-down third-quarter growth. Typically, we see guidance for 8 to 9 percent growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing a significant slowdown, and semiconductor-related inventory levels are still elevated."