Materials and Cost Benchmarking

Semiconductor Component Recovery Forecast for 2013

01 April 2013

After two years of slowdown, the long-term outlook for semiconductor components appears strong with a 5.7 percent compound annual growth rate (CAGR) forecast for the next four years, driven by increased consumer spending in the wireless market as well as the demand for new products across the healthcare, energy and public infrastructure segments, according to the latest IHS iSuppli Component Price Tracker from information and analytics provider IHS.

While semiconductor component pricing will continue to remain flat in the first quarter of 2013, IHS believes, echoing the weak performance of the previous period and of 2012 as a whole, pricing will pick up in the second quarter and finish this year with increases in average selling prices (ASPs) across all major multisourced commodity-type components.

Most major components in 2013 will see growth this year in market price after the first quarter. Other components, such as dynamic random access memory (DRAM), will have high fluctuations in price, with growth of 4.9 percent one quarter followed by a decline of 5.6 percent the next quarter, and then back to a 4.5 percent expansion in the following quarter. However, the strongest quarter this year will be the third, with most major components ticking up by 1 percent or higher.

Both 2011 and 2012 were down years for semiconductor components, but this year's market expansion is the product of a natural upswing in the consumer market cycle, along with the replenishment of inventories. The increase in consumer spending power will lead to industry expansion exerting a positive influence on demand for components in devices such as smartphones and tablets.

Demand is also coming from the communications market, energy, new buildings and improvements to public infrastructure as well as healthcare segment. In the last category, increased demand is being seen in power management for medical electronics, diagnostics, monitoring and various human-aid products.

Cleaning up

One of the more important markets for components in 2013 and beyond will be the growing area for alternative energy products such as hybrid and electric vehicles, wind and solar, and grid upgrades for smart meters and related equipment.

The push for cleaner energy on a global scale particularly will benefit many suppliers of inverters. Inverters are electrical power converters that change direct current to alternating current that are used in a wide range of applications. The semiconductor market for inverters is forecast to grow to $6.9 billion in 2016, up from $4.4 billion in 2011.

Extra-strength tablets

One of the strongest drivers for growth in semiconductor components is coming from the realm of media tablets, which are projected to enjoy a five-year CAGR of 28.7 percent beginning in 2013 for overall tablets.

Other strong areas will include building and home control with a five-year CAGR of 11.1 percent growth for components, mobile infrastructure with a 10.9 percent CAGR and mobile handsets with an 8.2 percent CAGR.

Read More >> Component Pricing to Remain Flat in Q1, but Increases Forecast for 2013


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