Who Will Rescue the Semiconductor Industry?

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As the year heads to an end, there is some bad news in store for companies such as Intel (NASDAQ:INTC) and AMD (NYSE:AMD), as well as their clients. Growth in the semiconductor industry will be lower than expected both this year and the next as falling PC demand couples with economic turbulence in the U.S. and China, according to research firm IDC.

Revenue this year will be $304 billion, up less than 1 percent and much less than the 4.6 percent growth forecast by IDC in July. For next year, the firm predicts a revenue growth of 4.9 percent to $319 billion, down from an earlier estimate of 6.2 percent, The Wall Street Journal said.

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However, it’s not all doom and gloom, especially with the growth expected from companies investing in semiconductors meant for new smartphone, tablet, set-top box, and automotive electronics technologies, such as Apple (NASDAQ:AAPL), Samsung (SSNLF.PK), and Google’s (NASDAQ:GOOG) Motorola. While slow PC demand continues to put a drag on growth, these new requirements will help stabilize some of the demand eventually.

“Semiconductors for smartphones will see healthy revenue growth as appetite for data, multimedia processing, and multitasking will drive high-end smartphone demand in developed countries while an ongoing transition to 3G networks will accelerate smartphone adoption in developing regions,” IDC’s Mali Venkatesan said in the report.

The IDC said inventories are likely to reach some sort of balance in the second quarter of the next year and growth will be back on track by the second half of 2013. The U.S. is predicted to see a healthy semiconductor growth cycle over the next five years, but regions such as Japan and Europe will be the weakest.

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