Downgraded chip industry may signal tech transition

Hardware struggles as chips and PCs continue slide

By , Computerworld |  Hardware

"Five out of the six major application markets for semiconductors, including the key computer segment, are expected to contract in 2012, pulling down the overall performance of the chip market," said Dale Ford, a senior director at IHS. "An extremely weak global economy resulted in poor demand for electronics. As a result, the semiconductor industry slipped from stagnation in the first half of 2012 to a slump in the second half."

On the bright side, Ford said the fourth quarter could bring a mild recovery in year-over-year sales, setting the stage for a market rebound in 2013.

While the wireless market still is predicted to continue to grow, the data processing, consumer electronics, industrial, wired communications and automotive segments all are expected to decline this year, reported IHS.

The PC-dominated data processing market is expected to drop by 7.8% in 2012.

There was also bad news for the global PC market , which is predicted to shrink in 2012 for the first time in 11 years, with the blame laid on the economy and consumers' growing passion for tablets and smartphones.

"The surge in popularity of smartphones and media tablets is driving healthy growth in the overall wireless semiconductor market segment in 2012, with a projected 7.7% expansion," said Ford. "However, all of the other end markets for semiconductors will see revenues fall in 2012, negating all the positive effects of the wireless segment."

Kerravala said he's surprised the rest of the chip industry is so bad that the booming tablet and smartphone segments aren't able to carry the entire chip market.

"While tablet and smartphone sales will be robust, the boom is probably behind us," he said. "The majority of people who need [a smartphone] have one, so it's now about the refresh."

IHS is predicting that global chip sales will rebound in 2013 if there is worldwide economic growth.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin and on Google+, or subscribe to Sharon's RSS feed. Her email address is

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