Shaky semi industry propped up by wireless boom

Despite low growth expected in the semiconductor industry, good performances in the wireless segment are helping drive sales.

Analysts at IHS have made predictions for the next twelve months and are expecting a bumpy road ahead, even if careering off into outright catastrophe isn’t on the cards just yet.

The soothsayers do believe that there should be an upturn towards the end of the year.  However, this will even out for a decent if hardly spectacular level of growth throughout 2012.

In this case it is expected that semi industry revenues will hit $323.2 billion, up 3.3 percent from $312.8 billion last year.  This is still better than the 1.25 percent revenue increase seen last year, but nevertheless market watchers are hardly jumping for joy.

Analysts reckon that if there are to be relatively stable conditions then growth should be good over the next few years, following a potential world economy recovery in 2013.  In this case growth could rise from 6.6 percent to 7.9 percent between 2013 and 2015, reaching $397.7 billion by the mid-point of the decade.

Anyone betting on best case scenarios is certainly optimistic.  At the beginning of last year there was optimism for good recovery in the chip market, until wave after wave of unforeseen upheavals battered markets across the world.

Considering the volatile situation at the moment, not to mention a year set to be bookended by a Mayan-predicted apocalypse, confidence that everything will turn out as a best case scenario is quite low.

The Eurozone is still crippled by indecision and uncertainties, and this is having knock on effects throughout the world, both in the US and in the East.

The potential impact on the semiconductor industry could be dire,  though it is still well placed – aside from some inventory level problems – to flourish if the conditions are right.

While the DRAM industry may be expecting double digit revenue declines there are some positive signs. Wireless communications will perform well again, even if doubts remain over the PC and peripheral markets. 

Consumer spending is set to continue to remain relatively high despite the uncertainty of the global economy, though this has not yet reignited chip demand to replenish stockpiles.

LTE will drive further increases in wireless infrastructure spending during the next year as wireless technology continues to make its mark. Global spending on LTE is expected to reach $24.3 billion in 2013, by which time even the UK will have finally began to catch up with 4G. This amounts to nearly triple the revenues expected for this year, penned in at $8.7 billion.

LTE infrastructure will reach $36.1 billion in 2015, while the precursor 3.5G is set to see spending of only $9.0 billion.

With certain countries rolling out 3.5G from 2009, this will be overtaken by full-on 4G services spending by 2013.

For the semiconductor industry, pressures are mounting to produce devices like metro cells that can be used along with wi-fi hotspots to provide coverage in public areas.

Some firms, such as Texas Instruments and Freescale, are already targeting the market, while companies like PicoChip and Broadcom are also readying scaled up versions of system on chip devices from femto bases.