SCOTTSDALE, AZ – The worldwide semiconductor industry growth forecast for 2011 has been lowered from 10% to 5%, and the 2011 IC market forecast from 10% to 4%.

The primary cause for this downgrade is the weak performance of the worldwide economy in the first half of this year, says IC Insights.

Currently, the “debt ceiling” issue in the US has not been resolved. Moreover, the work to contain the European debt crises is ongoing, although some progress had been made with regard to the financial situation of Greece, says the firm. IC Insights' current forecast assumes these issues will be resolved and that neither of them will cause a serious negative financial situation for the worldwide economy in the second half of 2011.

Overall, the quarterly worldwide GDP growth figures have been on a fairly steep decline since reaching a very strong level of 4.6% in the second quarter of 2010. In fact, the second-quarter 2011 worldwide GDP growth estimate of 3.1% is down 33% year-over-year. Moreover, the 3.1% figure for the second quarter of this year is only 0.6 points above the global recession mark of 2.5% growth.

IC Insights expects second-half 2011 worldwide GDP growth to be better compared to the first half of the year. One reason behind this expectation is that Japan's GDP is forecast to be much stronger in the second half of 2011, as post-earthquake investment and rebuilding efforts gain momentum.

Moreover, the US economy is also expected to perform better in the second half of 2011 as a result of lower gasoline prices (as compared to the first half of the year), a pickup in automotive assembly production (rebounding from the negative effects from the Japan earthquake), and an increase in capital spending by US businesses before the expiration of various tax breaks at the end of the year, according to IC Insights.

Although worldwide GDP growth in the second half of 2011 is not forecast to revert back to the levels registered in the first three quarters of 2010, it is expected to show noticeable improvement over the first half of 2011. This improvement is forecast to help drive a moderately better second-half semiconductor market, as compared to the first half and a full-year 2011 growth rate of 5%.

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