Forecasts and results indicate persistent economic weakness

The semiconductor, equipment, and printed-circuit-board markets reflect economic weakness, according to reports released over the last week from IHS iSuppli, IPC—Association Connecting Electronics, and SEMI.

IHS said it is downgrading its forecast for the global semiconductor market in 2012, with revenue now expected to decline by 2.3% for the year. Dale Ford, senior director, electronics and semiconductor research for IHS, noted that five out of six semiconductor applications areas are expected to contract this year—the hot wireless segment is the exception and is set to expand.

(Update: in late breaking news, IHS reported that Qualcomm is riding the wireless wave: “In a miserable 2012 semiconductor market that will see revenue decline at seven of the world’s Top 10 semiconductor suppliers, Qualcomm Inc. is standing out, with a double-digit increase in sales that will make it the world’s third-largest chip maker this year. Qualcomm is set to end 2012 with a stunning 27.2 percent growth in semiconductor revenue.)

And there is good news for some component segments—CMOS image sensors, LEDs, ASICs, and sensors should see revenue increases. In addition, IHS predicts semiconductor revenue will expand by 8.2% in 2013 if a predicted small improvement in worldwide GDP growth forecast for 2013 holds up.

For its part, IPC's October findings show North American book-to-bill ratios of 0.98 for rigid PCBs and 0.74 for flexible circuits. Nevertheless, Sharon Starr, IPC director of market research, noted that flexible-circuit sales have rebounded, and she predicted a near-term industry recovery, adding that U.S. government action to deal with the fiscal cliff would have significant impact.

With respect to semiconductor manufacturing equipment, SEMI forecasts that after a 151% market increase in 2010 and a 9.0% increase in 2011, the equipment market will contract by 12.2% in 2012, with the market for semiconductor test equipment declining by 4.8%, reaching $3.6 billion this year. Denny McGuirk, president and CEO of SEMI, attributed the contraction to the significant investments over the past two years as well as a slowdown in the broader economy.

SEMI reported that in 2013, China, Taiwan, and Japan will see slight to moderate growth although the overall 2013 forecast indicates another 2.1% reduction in sales, The organization expects 2014 sales to rebound by increasing 12.5%.

Earlier in November, SEMI released figures also showing weakness. The organization reported that North America-based manufacturers of semiconductor equipment posted $743.2 million in orders worldwide in October 2012 (three-month average basis) and a book-to-bill ratio of 0.75.

“Semiconductor industry investments remain muted as the industry enters the fourth quarter,” said Denny McGuirk, president and CEO of SEMI, in a press release. “Investments in leading-edge technologies will continue to drive spending in the near-term, while a clearer 2013 outlook will emerge over the next couple of months as capex plans are announced.”