Worldwide Semiconductor Market Contracted 2.2% in 2012 to $295 Billion – IDC Expects 3-4% Revenue Growth in 2013

SAN MATEO, Calif., May 22, 2013 – Worldwide semiconductor revenues decreased by 2.2% year over year to $295 billion in 2012, according to the latest version of the International Data Corporation (IDC) Semiconductor Application Forecaster (SAF). The industry witnessed a slowdown during the second half of 2012 on weak consumer spending across PCs, mobile phones, and digital televisions (DTV), as well as in the Industrial and other market segments. The European economic crises and a slowdown in China also had an impact on global demand while the lackluster launch of Windows 8 failed to stimulate PC sales and turn the tide. Meanwhile, competitive suppliers from China continued to pressure average selling prices, dragging down overall revenue growth. IDC expects the semiconductor market to return to growth in 2013 with revenues forecast to increase by 3.5% this year.

IDC's SAF tracks more than 120 semiconductor companies. Most companies saw their revenues decline during the year, including eight of the top ten companies. Only 17 companies, with revenues of a billion or more, grew at a rate above 5% last year. Among the 25 largest companies covered in the SAF, only seven had positive top-line growth, including: Qualcomm, Broadcom, NXP, NVIDIA, MediaTek, Apple, and Sharp Electronics. AllWinner, a tablet application processor supplier, was the fastest growing company in 2012.

The largest semiconductor company, Intel, saw its revenues decline to $50.0 billion in 2012, down 3% from 2011 largely due to weak PC demand, and minimal traction in tablets and smartphones. Samsung Electronics, the second largest supplier, saw revenues drop 6% on weak DTV demand, loss of market share at Apple, and volatile memory prices. Meanwhile, Qualcomm, the largest fabless semiconductor supplier, ranked third last year as revenues grew 34% to $13.2 billion due to its leadership in modem technology and success of its Snapdragon application processor in smartphones. Texas instruments, the number four supplier, saw revenues decline by 6% due to falling analog, DSP, and MPU revenues and the company's exit from its wireless business. Rounding out the top 5, Toshiba revenues were off by 13% from the previous year due to declining revenues for its analog, ASSP, and memory products. Renesas, Hynix, Broadcom, STMicroelectronics, and Micron filled out the top 10 spots. From this group of companies, only Broadcom saw revenues grow last year. Combined, the top 10 vendors represented 52% of worldwide semiconductor revenues, declining 3% when compared to 2011. The top 25 semiconductor firms brought in $206 billion, declining 3% year over year.

Within the semiconductor device types, performance was mixed. Sensors and actuators grew the fastest at 11% year over year, but with 2012 revenues of $7 billion the segment only accounted for 2% of industry revenues. ASSPs, the largest category of semiconductors with 32% of the overall opportunity, grew by 4% for the year on strength in media, graphics, and application processors and RF and mixed-signal ASSPs. Finally, optoelectronics, with 6% of total semiconductor revenues, grew 5%, mostly from image sensors and LEDs. Revenues for microcomponents declined by 5%, driven by lower revenues for MPUs and MCUs. Memory, representing 17% of the industry, saw its revenues decline by 10%. Finally, Analog, which accounted for 7% of revenues last year, declined by 7%.

"Beyond the slowdown in end-market demand, the challenge for semiconductor companies is to zero in on their key value propositions. Whether that is in modem or connectivity technologies, sensors, mixed-signal processing, or power management, there are areas of the market showing strong potential. However, competing in crowded segments with little differentiation has contributed to the slowdown in semiconductor revenues," said Michael J. Palma, Research Manager, Semiconductors at IDC, who led the study and compiled the SAF results. "Large vendors have been going through a process of narrowing their product portfolios to focus resources on profitable lines where their IP and experience provide an edge in the market."

"As we mentioned in our Top 10 Predictions for the 2013 worldwide semiconductor market (IDC document #232832), investment in R&D and capital in the semiconductor industry remains very high and focused on innovation and addressing the competitive dynamics of a diverse set of industries that semiconductors support. In fact, the overall market landscape and reach of semiconductors continues to expand with the rise of Intelligent Systems and will play a critical role in the overall health and growth of the market," said Mario Morales, Program Vice President for enabling technologies and semiconductors.

IDC's Semiconductor and Enabling Technologies research team manages the Worldwide Semiconductor Applications Forecaster database, which is a focal point for IDC's semiconductor research efforts. This database contains revenue data collected from more than 120 semiconductor companies and forecasts the markets to 2017.Revenue for over twelve semiconductor device areas, four geographic regions, six major vertical markets, and over 90 system devices markets are also part of the SAF coverage.

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