Analyst has revised downward its growth projection for the 2011 global semiconductor industry to 5% from the 10% previously estimated, and also cut its forecast for the chip market for 2011 from 10% to 4%. The primary cause for this downgrade is the weak performance of the worldwide economy in the first half of the year.
Headwinds" the global economy faced in the first half of 2011, including civil unrest in Arab countries, the impact of Japan's earthquake, natural disasters in the US and debt problems in Europe and the US. These events caused quarterly worldwide economic growth to slow significantly in the first half of 2011 as compared to 2010 and in turn served to slow worldwide electronics and semiconductor industry market growth.
Currently, the "debt ceiling" issue in the US has not been resolved. Moreover, the work to contain the European debt crises is ongoing, although some progress had been made with regard to the financial situation of Greece. Forecast assumes that these issues will be resolved and that neither of them will cause a serious negative financial situation for the worldwide economy in the second half of 2011.
Although the US debt ceiling and European debt crises are likely to be addressed without creating a worldwide financial panic or meltdown, both of these situations have caused a great amount of uncertainty throughout the world, affecting both businesses and consumers alike.
Analyst expects the worldwide GDP growth in the second half of 2011 to be better when compared to the first half of the year. One reason behind this expectation is that Japan's GDP is forecast to be much stronger in the second half as post-earthquake investment and re-building efforts gain momentum. Moreover, the US economy is also expected to perform better in the second half due to lower gasoline prices (as compared to the first half of the year), a pick up in automotive assembly production (rebounding from the negative effects from the Japan earthquake), and an increase in capital spending by US businesses before the expiration of various tax breaks at the end of the year.
Although worldwide GDP growth in the second half of 2011 is not forecast to revert back to the levels registered in the first three quarters of 2010, it is expected to show noticeable improvement over the first half of 2011. This improvement is forecast to help drive a moderately better second-half semiconductor market as compared to the first half and a full-year 2011 growth rate of 5%.