Component prices plunging on economic uncertainty, says IHS

LONDON – Every cloud has a silver lining, and for component buyers it is the declining prices they need to pay for some components, according to market research firm IHS-iSuppli (El Segundo, Calif.).

The market research firm reckons that widely used components including capacitors, crystals, filters, magnetic, oscillators and printed circuit boards are all set to decline at above average rates in the third and fourth quarters of 2012. However, the company has also predicted a typical pattern of quarterly semiconductor revenue growth for 2012.

Normally average selling prices firm up in the second half of the year as suppliers raise them to take advantage of strong demand during the back-to-school and holiday build seasons. That often acts as an amplifier for third quarter sales figures with units and ASPs up together.

"However, prices are weak this year because of a global economic malaise due to the crisis in Europe and a rapid slowdown of manufacturing in China. Although overall semiconductor revenue is expected to rise in the second half, pricing for many specific components is falling at a faster rate in reaction to poor economic news," said Rick Pierson, an analyst at IHS-iSuppli.

What is more, the weakness is sharp reversal from the outlook earlier this year when it appeared that ASPs were set to rise for many component categories after an inventory burn off. IHS-iSuppli is recommending buyers should act now as this represents an opportunity for bargain hunting.

However, despite the above-normal price declines for passive components as outlined above, the global semiconductor industry is set for a typically strong second half. After declining by 3.3 percent in the first quarter and rising by 5.4 percent in the second quarter, global semiconductor revenue is expected to increase by 8.7 percent sequentially in the third quarter, before settling down to 1.0 percent growth in the fourth quarter. That represents a slightly stronger sequential growth pattern than is typical in the semiconductor industry.


Related links and articles:

Chip sales likely slowed in June, says analyst

Analyst lowers 2012 chip market growth forecast

A Hitchcockian nightmare: Europe falling off a cliff

Europe asks if it is time for an 'Airbus of chips'