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Date: 30-07-13

Semiconductor industry back on growth path, IDC estimates 6.9% for 2013

Semiconductor industry is regaining growth, most of the leading semiconductor companies have reported a good quarterly growth in second quarter of year 2013. The growth is not limited to any one segment. The growth is overall; discrete analog, memory, processor and application-specific chips all are growing.

Market researcher IDC has forecasted a semiconductor revenue growth of 6.9% in year 2013 to reach a revenue of US$ 320 billion. IDC goes a step further and forecast a growth of 2.9% for the year 2014, where it says "semiconductor revenues to grow 2.9% year over year in 2014 to $329 billion and log a compound annual growth rate (CAGR) of 4.2% from 2012-2017, reaching $366 billion in 2017. "

The factors such as slowdown in China, eurozone debt crisis and recession, Japan recession, and the U.S. sequester's impact on corporate IT spending are going to affect the chip industry throughout this year, as per IDC. Though PC market is weak the ASPs of DRAM and NAND is not falling. The fall in chip inventory and the rising demand is reason for the present growth.

Nina Turner, research manager at IDC says "Semiconductors for smartphones will see healthy revenue growth as demand for increased speeds and additional features continue to drive high-end smartphone demand in developed countries and low-cost smartphones in developing countries. Lower cost smartphones in developing countries will make up an increasing portion of the mix and moderate future mobile wireless communication semiconductor growth. PC semiconductor demand will remain weak for 2013 as the market continues to be affected by the worldwide macroeconomic environment and the encroachment of tablets,"

Abhi Dugar, research manager for semiconductors, embedded system solutions, and associated software in the cloud, mobile, and security infrastructure markets commented "Communications infrastructure across enterprise, data centers, and service provider networks will experience a significant upgrade over the next five years to support the enormous growth in the amount of data and information that must be managed more efficiently, intelligently, and securely. This growth is being driven by continued adoption of rich media capable mobile devices, movement of increasingly virtualized server workloads within and between datacenters, and the emergence of new networking paradigms such as software defined networking (SDN) to support the new requirements."

IDC says Japan is a weak market compare to other regions but it forecasts improvement in 2013 over 2012. The reason for improvement is the demand for smartphones and tablet to remain strong and also strong demand in automotive electronics and semiconductors for industrial electronics market.

Other key findings shared by IDC includes:

1. Semiconductor revenue for the computing industry segment will log year-over-year growth of 2.0% for 2013 and will show a slow CAGR of only 0.9% for the 2012-2017 forecast period. Semiconductor revenue from mobile PC demand will register year-over-year growth of -0.6% in 2013, only returning to positive growth in 2015.
2. Semiconductor revenue for the mobile wireless communications segment will grow 10.3% year over year in 2013 with a CAGR of 5.2% for 2012-2017. Semiconductor revenue for 4G phones will experience an annual growth rate of 121.8% in 2013 and a CAGR of 37.9% for 2012-2017.
3. Media tablets, escape, blu-ray DVD players, and set-top boxes will continue to drive above average semiconductor revenue growth. Sales of CRT and rear projection TVs, HD receivers, digital video and still cameras, and DVD recorders and players will continue to erode. Overall, semiconductor revenue for the consumer segment will record year-over-year growth of 15.0% in 2013 and a 2012-2017 CAGR of 7.5%.
4. The 4.3% year-over-year growth in 2013 in wired communications infrastructure semiconductors will be driven primarily by enterprise switches and routers, security appliances, and service provider switches and routers. Optical transport equipment, TDM and VoIP IMS, service provider head-end access equipment, and consumer network will also grow in 2013 over 2012, but to a lesser extent.
Driven by the increase in semiconductor content in automobiles (i.e. applications such as in-vehicle infotainment, automobile body electronics, and driver safety systems), semiconductor revenue for the automotive segment is expected to grow 5.3% in 2013.
Regionally, Asia/Pacific will experience year-over-year growth of 6.9% in 2013 and a CAGR of 4.9% for 2012-2017.

Below is the revenue figures of some of the well known semiconductor companies for the period of 2nd Q 2013:

1. Sequentially AMD's 2Q 2013 revenues grew by 6.4%, compared to AMD 1Q 2013 revenue of 1.09 Billion. AMD is expecting a growth of 22% in next quarter.

2. Intel has reported a second-quarter revenue of $12.8 billion, a growth of 2% sequentially. Intel's outlook for 3Q2013 is 13.5 Billion US$.

3. Multi-domain semiconductor specialist STMicroelectronics reported net revenues totaled $2.05 billion for its second quarter ending June 29, 2013. ST’s second quarter revenues, excluding the Wireless product line, increased 6.8% on a sequential basis and 3.6% on a year-over-year basis, reflecting better than normal seasonality.

4. Discrete and analog device maker Fairchild Semiconductor has reported second quarter sales of $356.5 million, up 4 percent from the prior quarter and 1 percent lower than the second quarter of 2012.

5. Analog and mixed-signal semiconductor leader Texas instruments has posted a quarterly revenue of US$3.05 billion and a net income of US$660 million for its second quarter of 2013, a revenue growth of 8% compared to the previous quarter.

Quite a motivating figures for rest of the year.

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