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After a decent first quarter, the big players of the semiconductor industry are expecting smoother sailing throughout the next few quarters. Especially now that supply chain setbacks resulting from the flooding in the third quarter of last year have fully recovered and consumer demand is improving. The Semiconductor Industry Association (SIA) announced in early May 2012 that global sales of semiconductors in Q1 2012 had reached nearly $70 billion. Although this was a slight decrease of about 8 percent from last years first quarter sales and a slight sequential decline from Q4 2011, the upwards trends are encouraging, especially in Europe and Japan, which had seen very poor results over the last few quarters of 2011.
The semiconductor industrys recent good fortunes can be especially attributed to the unrelenting popularity of mobile devices including smartphones and tablets, such as Apples market leading iPhone and iPad devices. Apples successes in these markets continued to mount when it announced in late April that its profits had jumped 93 percent in the first quarter from the same period one year ago, as stronger than expected iPhone sales and new revenue from China helped drive the firm to record profits.
Apples success has also extended to its chip suppliers as well. For example, the share prices of Cirrus Logic, a supplier of audio processors for Apple, jumped significantly upon news of Apples first quarter success. Meanwhile, OmniVision a supplier of semiconductor image-sensor devices to Apple also saw a boost in its share prices in the first quarter after Apples announcement. While nearly all categories of chips have benefitted from the booming smartphone market, the greatest growth has come in higher end chips such as application processors, radio frequency (RF), power management, and wireless connectivity chips. Application processors, which help power the heart of the latest smartphone devices, have particularly flourished and no one firm has benefitted from this more than San Diego-based Qualcomm.
Qualcomm, which announced in April 2012 that its first quarter company revenues had reached $4.94 billion, or up 28 percent year-over-year, has reaped the benefits from the global move to more advanced mobile devices, as well as increased adoption in emerging markets. The company is also pegging that future growth will come from last years purchase of Atheros for $3.1 billion. Atheros, which designs wireless connectivity chips, will play a larger role in Qualcomms near term strategy of connecting smartphones to other devices in the home, including HDTVs and set-top-boxes.
Intel, the worlds largest chip supplier, is a new player in the mobile space with its Atom mobile processor, and although it is still a minor player in terms of sales thus far, it could end up being the greatest challenger to Qualcomms throne yet. The firm believes that the latest version of its Atom processor will help it gain a major foothold in this industry.
Intel will first make its move in the smartphone markets of emerging regions, such as China and India. For example, the latest smartphone release for Intel was the India-based Lava Internationals new XOLO X900 which debuted in India in late April and runs Intels low-power Atom Z2460 Medfield processor. But even with all of this said, Intel still has its work cut out for it, as this increasingly competitive market is populated by some of the worlds largest and most successful semiconductor firms, including the likes of Qualcomm, Broadcom, Samsung, Nvidia, and an even increasing number of ARM licensees, which will even grow to include software giant Microsoft sometime in the third quarter of 2012.
Additionally, there will be greater industry consolidation this year, which began last year with several high profile mergers and acquisitions including Qualcomm / Atheros, Texas Instruments / National Semiconductor, Broadcom / NetLogic, and CSR / Zoran. This will mean that competition among chip suppliers should heat up even further as the year goes on and as the booming smartphone and mobile computing markets help keep the semiconductor industry highly profitable.
This information above is provided from Databeans Inc., in the Q1-2012 Semiconductor Market Tracker.
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