EL SEGUNDO, CA – Amid lingering economic woes and continuing poor visibility into future demand trends, iSuppli last night lowered its forecasts for global semiconductor and electronics equipment revenue in 2009. The research firm cited lagging auto sales as the major drag on a recovery.

Worldwide electronics equipment revenue is set to decline to $1.38 trillion in 2009, down 9.8% from $1.53 trillion in 2008. iSuppli’s previous forecast in April predicted a 7.6% decline in revenue.

Global semiconductor revenue is set to fall to $198.9 billion in 2009, down 23% from $258.5 billion in 2008. iSuppli’s April forecast called for a 21.5% decline.

"The global economy and technology industry has undergone a period of uncertainty and volatility," said Dale Ford, senior vice president, market intelligence services, for iSuppli. "With technology companies downgrading their forecasts, and with little visibility into future demand trends, conditions appear to be worse than previously expected in 2009."

While all electronics segments are expected to suffer contractions in 2009, the automotive sector is the major culprit behind iSuppli’s downgrade.

"The decline of worldwide automobile sales, particularly in North America, has had a major impact on overall electronic equipment shipments," Ford said. "iSuppli has cut its 2009 automotive electronics forecast to $75.2 billion, down 24.4% from $99.6 billion in 2008. This is a 3.8%age point reduction from iSuppli’s previous forecast."

The other five major electronic equipment categories – data processing, wired communications, wireless communications, consumer and industrial – all had their growth forecasts revised downward by rates ranging from less than 1%age point to nearly 6 points, reflecting overall technology market turbulence and lack of visibility.

The weakening outlook of the electronics equipment market has prompted iSuppli to trim its semiconductor forecast. However, with the start of the second half, conditions are looking up for both semiconductors and electronics equipment.

"There were signs that the economic decline was becoming less pronounced near the end of the first half," Ford said.  "Even after trimming their expectations for the year, key semiconductor companies are entering the second-quarter financial reporting period with revenue guidance averaging 13% sequential growth compared to an overall revenue decline of 18.8% posted in the first quarter of 2009."

The semiconductor industry in the first quarter was severely impacted by Japanese chipmakers, which underwent a severe decline in production during the period. However, Japan’s semiconductor makers now have reduced their excess inventories and have resumed production.

After a 7.1% sequential increase in the second quarter iSuppli predicts global semiconductor revenue will rise by 10.4% in the third quarter and by 4.9% in the fourth. Following a 19.4% plunge in the first quarter, global electronics equipment revenue rose by 1.9% in the second quarter and will increase by 10.4% in the third and by 8.9% in the fourth.

While these sequential increases won’t be enough to generate annual revenue growth for chips or electronic products, they likely will pave the way for a better year in 2010. "iSuppli is projecting the semiconductor industry will show improvements beginning in the fourth quarter, which will provide the basis for overall growth of 13.1% in 2010," Ford said. "Global electronics equipment revenue also will rise by 4.9% in 2010."

 

 

 

 

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