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September 13, 2013

Worldwide Semiconductor Market to Grow, Consolidations Still Afoot

By Steve Anderson, Contributing TMCnet Writer

A new report out from ABI Research (News - Alert) suggests that there's at least a little good news out there for the semiconductor industry on a global level. Not only is there expected to be fully 3 percent growth between 2012 and 2013 to reach a projected total of $298 billion, but there have also been signs of growth between the first and second quarters of 2013, and most of the top 20 vendors in the field are expecting growth for the third quarter of 2013 as well. But there are still some issues in the market that may see some groups vanish under various consolidations.



Several major moves are expected in the market, at last report, to arrive in the closing half of 2013. There's the Micron acquisition of Elpida—which some have even noted came with layoffs at Micron, though a Micron spokesman was quoted saying that the Elpida acquisition was unrelated to the layoffs—as well as the expected merger between the semiconductor devices at Panasonic and Fujitsu. Throw in the smaller issues, like Broadcom acquiring Renesas Mobile's LTE assets and Intel getting hands on ST-Ericsson's (News - Alert) GPS business and the end result says a lot of consolidation in the field.

Despite the dwindling numbers of firms in the field, the market is still poised for at least some gains and already has seen some gains right now. According to ABI Research practice director Peter Cooney, the growth isn't going to end with the coming of 2014, either. Cooney projects that there will be growth in 2013 with a general improvement in the wider economy of where it was, but it won't be until 2014 that some serious growth in the market starts to hit. While falling margins and an increasingly competitive environment have driven a lot of changes in the field—along with plenty of firms getting out of semiconductors entirely, with more to come—there will still be demand for the products, and that may make the whole thing a bit more cyclical than anything else.

It's kind of odd to see firms departing the market, especially with word of expansion in the future, but then it may well be that the expansion is a result of the contracting firms. With fewer producers of such product, the remaining offerings may be more attractive to buyers, and that may drive some upticks. But still, with too many firms in the field, there would be basically too many mouths to feed, and more than a few likely just couldn't wait for projections of expansion to happen. Additionally, with larger numbers in the field, each individual share of that expansion would be smaller anyway.

While the semiconductor market may be looking at a bit of a renaissance coming up, only time will tell if it actually arrives. It likely can't come soon enough, however, for the companies remaining in the field.




Edited by Alisen Downey
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