Chip sales falter in Q2 as weak market looms, IHS iSuppli says

IHS iSuppli is predicting overall 2012 chip sales growth to be less than 1.4 percent when compared to 2011 revenue

Weak economies in the U.S. and Europe together with a slowdown in manufacturing in China hurt semiconductor sales during the second quarter this year, and the market will deteriorate further in the coming quarters as issues continue to plague chip suppliers, IHS iSuppli said in research released on Thursday.

Global chip sales during the second quarter totaled $77 billion, a drop of 3 percent compared to sales during the second quarter of last year. Chip sales dropped for six of the top 10 suppliers, with semiconductor companies in Japan and Europe affected the most, according to research from IHS.

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Economic concerns will continue to hurt chip suppliers for the rest of the year, said Dale Ford, senior director of electronics and semiconductor research at IHS, in a statement. IHS is forecasting 2012 semiconductor revenue growth to be less than 1.4 percent, which was the growth rate recorded in 2011.

Recent studies have also stated that less demand for PCs has slowed demand for components like memory, which has also hurt semiconductor sales.

According to IHS, Intel retained its position as the top chip supplier, with sales of $12.01 billion, growing by just 3.1 percent and holding 16 percent market share. Samsung was in second place, with sales of $7.57 billion, growing by 5.8 percent year over year, with market share of 10.1 percent. While revenue for third-place Texas Instruments dropped 13 percent to $3.13 billion, the fastest growth rate was recorded by fourth-place Qualcomm, with sales growing 23.7 percent to $2.87 billion. Qualcomm's chips go into mobile devices like tablets and smartphones, which are fast-growing markets.

Region-wise, Japanese companies like Toshiba and Renesas recorded double-digit revenue declines, and revenue for the region overall declined by 4.6 percent year over year, IHS said. Studies from other research firms like IC Insights have also concluded that Japanese semiconductor firms are hurting, partly due to the contraction of the industry, including the acquisition of Elpida by U.S.-based Micron, and also due to the slowdown in demand for NAND flash, which has hurt Toshiba.

Sales for European semiconductor companies declined 8.3 percent, with companies like STMicroelectronics and Infineon Technologies recording double-digit year-over-year revenue declines.

Agam Shah covers PCs, tablets, servers, chips and semiconductors for IDG News Service. Follow Agam on Twitter at @agamsh. Agam's e-mail address is agam_shah@idg.com

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