(By Balachander) Research firm IHS Inc. (NYSE:IHS) downgraded its semiconductor market outlook for 2012, saying weakening economic conditions are driving lower demand for personal computers and related electronic components.
IHS currently forecasts global semiconductor revenue to fall slightly for the year, down from prior view of marginal growth of less than 3 percent, marking the first annual decrease for the global semiconductor market since 2009.
Dale Ford, senior director at IHS said "the disappointing results in the second quarter and weak third-quarter expectations driven by poor economic conditions are expected to cause the semiconductor market to retreat this year."
IHS said it never projected revenue to decline last year even though electronics markets were very weak.
Revenue growth was only around 3.0 percent in the second quarter of 2012 on a sequential basis. First-quarter revenue declined modestly by 3.6 percent compared with the final three months of 2011, IHS said.
"Subdued expansions during these two key quarters indicate the semiconductor market will not generate sufficient growth to prevent the market from contracting for the year," Ford said.
Ford added that the downward pressure created by the worsening deceleration of the PC semiconductor market will outweigh the mid single-digit growth in semiconductor demand forecast expected for wireless communications and the smaller industrial electronics segment.
IHS, however, continues to project a strong growth rebound of more than 9 percent in 2013, based on expectations of improving economic conditions.