Economy Threatens Semiconductor Market Growth Driven by Intel, AMD

New chips from Intel and AMD are helping drive demand for computer semiconductors, but uncertain economic conditions could hurt growth, IDC says.

The worldwide semiconductor market is seeing a number of growth drivers, including new chips from Intel and Advanced Micro Devices, continued commercial adoption of Microsoft s Windows 7 operating system and rising demand for such mobile devices as smartphones, according to market research firm IDC.

However, there also are developments that will be a drag on the market over the next few years, including economic uncertainty in mature markets like the United States and Europe as well as emerging markets like China, Brazil and India, IDC analysts said in a report issued July 21.

The result will be semiconductor revenue growth of 5 percent in 2012, down from the 9 percent increase expected in 2011, they said. IDC is projecting modest revenue growth in 2011, to $303 billion. Demand for such products as mobile devices and Internet-connected products will continue to rise, but overall growth will be challenged, according to IDC analyst Mali Venkatesan.

"IDC also cautions that continued macroeconomic problems, such as persistent high unemployment with the associated low consumer sentiment in the U.S., the ongoing sovereign debt crisis, especially in Europe and U.S., fear of recession in U.S. and Japan in 2012, and fear of high inflation in China, India, and Brazil, will likely impact semiconductor market negatively in 2012," Venkatesan said in a statement. "But long-term secular growth driven by end applications such as smart phones, media tablets, mobile PCs, set top boxes, LCD TVs, wired networks, industrial automation, and automotive infotainment remains strong,"

The computing segment -- which represents about 40 percent of all semiconductor revenues -- is being buoyed by new chips launched this year by Intel and AMD. At the 2011 Consumer Electronic Show in January, both companies launched new architectures that offer high-level graphics capabilities integrated onto the same piece of silicon as the CPU, a move designed to increase performance while driving down power and cooling costs.

This article was originally published on 07-22-2011
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