Intel, Samsung Lead Contracting Semiconductor Market: IDC

Worldwide semiconductor revenues decreased by 2.2 percent year-over-year to $295 billion in 2012.

The worldwide semiconductor industry witnessed a slowdown during the second half of 2012 on weak consumer spending across PCs, mobile phones and digital televisions, as well as in the industrial and other market segments, according to research firm IDC’s Semiconductor Application Forecaster (SAF).

Worldwide semiconductor revenues decreased by 2.2 percent year-over-year to $295 billion in 2012. The largest semiconductor company, Intel, saw its revenues decline to $50 billion in 2012, down 3 percent from 2011 largely due to weak PC demand, and minimal traction in tablets and smartphones. Samsung Electronics, the second largest supplier, saw revenues drop 6 percent on weak digital TV demand, loss of market share at Apple, and volatile memory prices.

Only 17 companies, with revenues of $1 billion or more, grew at a rate above 5 percent last year, the report noted. Among the 25 largest companies covered in the SAF, only seven had positive top-line growth, including Qualcomm, Broadcom, NXP, Nvidia, MediaTek, Apple and Sharp Electronics. AllWinner, a tablet application processor supplier, was the fastest-growing company in 2012.

Within the semiconductor device types, performance was mixed. Sensors and actuators grew the fastest at 11 percent year-over-year, but with 2012 revenues of $7 billion, the segment accounted for just 2 percent of industry revenues. Application-specific standard products (ASSPs), the largest category of semiconductors with 32 percent of the overall opportunity, grew by 4 percent for the year on strength in media, graphics and application processors and mixed-signal ASSPs.

Revenues for microcomponents declined by 5 percent, driven by lower revenues for microprocessors and microcontrollers. Memory, representing 17 percent of the industry, saw its revenues decline by 10 percent. Analog, which accounted for 7 percent of revenues last year, declined by 7 percent, and opto-electronics, with 6 percent of total semiconductor revenues, grew 5 percent, mostly from image sensors and LEDs.

"Beyond the slowdown in end-market demand, the challenge for semiconductor companies is to zero in on their key value propositions. Whether that is in modem or connectivity technologies, sensors, mixed-signal processing, or power management, there are areas of the market showing strong potential," Michael Palma, research manager for the semiconductor market at IDC, who led the study and compiled the SAF results, said in a statement. "Large vendors have been going through a process of narrowing their product portfolios to focus resources on profitable lines where their IP and experience provide an edge in the market."

The European economic crises and a slowdown in China also had an impact on global demand while the lackluster launch of Microsoft’s Windows 8 operating system failed to stimulate PC sales and turn the tide. Meanwhile, competitive suppliers from China continued to pressure average selling prices, dragging down overall revenue growth. IDC analysts said they expect the semiconductor market to return to growth in 2013 with revenues forecast to increase by 3.5 percent this year.

"Investment in R&D and capital in the semiconductor industry remains very high and focused on innovation and addressing the competitive dynamics of a diverse set of industries that semiconductors support,” Mario Morales, program vice president for enabling technologies and semiconductors at IDC, said in a statement. “In fact, the overall market landscape and reach of semiconductors continues to expand with the rise of intelligent systems and will play a critical role in the overall health and growth of the market."