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Eurozone crisis stunts power semiconductor growth

Power semiconductors face slow growth in 2012, due to "economic uncertainties"

The global power semiconductor market has grown just 3.7 percent in 2011, due to inventory corrections and major economic uncertainties surrounding the Eurozone crisis in the second half of the year, according to IMS Research.

The power semiconductor market was hit hard by the recession, declining 17.4 percent in 2009. It experienced a miraculous recovery in 2010, growing 36.8 percent to reach $29.6 billion. However, the pace of growth has slowed once again, with the market expected to grow by just 5 percent in 2012 to $32 billion.

IMS research director Ash Sharma explained that the effects of the economic uncertainty and reduced spending by consumers and businesses on the power semiconductor market will probably continue long in 2012, and industry revenues in the first half of 2012 will be flat year-on-year.

"During the downturn, distributors and also OEMs flushed internal inventory so they were not sitting on lots of stock when they had low demand," Sharma told Techworld. "When demand returned during the recovery they began to order and in many cases over-ordered in 2010 which led them to have higher than normal inventory levels. As a result they needed to order fewer components in 2011 as they already had stock."

Sharma said that this situation had been corrected by the second half of 2011. However, the market will not return to double-digit growth until 2013.

"This downturn will affect all sectors and the reason why we've cut our forecast for power semiconductors as they are used in virtually every piece of electronic equipment," he added.

Power ICs are expected to outperform power discrete devices next year, driven by strong demand for smartphones using battery management integrated circuits. Meanwhile, the power module market will continue to outperform both power discretes and power ICs, driven by demand for IGBT (insulated gate bipolar transistor) modules, primarily used in electronic switches.

This follows a report issued by analyst firm Gartner earlier this month, in which it reduced its worldwide semiconductor revenue forecast for 2012 from 4.6 percent to 2.2 percent. The firm also cited the Eurozone crisis and inventory correction as key factors.

"The high degree of uncertainty impacting spending by both consumers and enterprises looks set to continue, bringing with it significant implications for the semiconductor industry," said Bryan Lewis, research vice president at Gartner.


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