Semiconductor sales slowing warns Gartner

The Market analyst projects total revenue of $299billion for 2011, down from its previous Q2 forecast of 5.1% growth. According to Bryan Lewis, research vice president at Gartner, three key factors are shaping the short term outlook: excess inventory, manufacturing overcapacity and slowing demand due to economic uncertainty. "Semiconductor companies' third quarter guidance is well below seasonal averages," said Lewis. "The current guidance by vendors points to flat to down third quarter growth. Typically, we see guidance for 8 to 9% growth in the third quarter because of back to school and the holiday build. The supply chain is also showing significant slowdown and semiconductor related inventory levels are still elevated." Gartner reports that pc production unit growth has 'significantly' decreased, with an initial forecast of 9.5% growth reduced to 3.4%. The analyst has lowered its forecast of mobile phone production unit growth from a Q2 projection of 12.9% growth to 11.5% growth. As a result of reduced pc demand, Gartner adds that DRAM has been severely impacted and it now expects a decline of 26.6% in 2011. It reports that NAND flash and data processing asic are the fastest growing device areas in 2011 with about 20% growth. Gartner cites this success to the burgeoning tablet market. "2012 is the wild card," said Lewis. "We have lowered our 2012 semiconductor forecast from 8.6% to 4.6% due to a worsening macroeconomic outlook. However, the odds of a double dip US recession continue to rise and are raising fear that sales prospects will deteriorate further. Gartner is closely monitoring IT and consumer sales trends for any significant signs of weakness."