Companies will continue to outsource production to foreign third parties, sending revenue into decline
Los Angeles, CA (PRWEB) February 07, 2013
Semiconductors are the brains of electronics and form an increasingly vital part of a range of products, from electronic devices and systems (e.g. computers, cell phones and TVs) to solutions and services (e.g. internet providers, telecommunications and broadcasting services). According to IBISWorld industry analys Andrew Krabeepetcharat, total US demand for semiconductors and related devices will be worth an estimated $96.1 billion in 2013, with imports satisfying 47.3% of domestic demand. Semiconductor and Circuit Manufacturing industry revenue is expected to increase at an annualized rate of 1.9% to $78.2 billion in the five years to 2013. Industry revenue is expected to fall in 2013, however, as demand for US-made semiconductors shrinks due to more efficient, lower-cost alternatives abroad.
“During the five years to 2013, production outsourcing and price reductions have hampered revenue growth,” says Krabeepetcharat. “Declines were exacerbated by the recession and the consequent decline in demand for computers and consumer electronics.” Downstream demand from domestic computer manufacturing, for example, has fallen at an annualized rate of 7.4% in the five years to 2013, thus reducing the US Semiconductor and Circuit Manufacturing industry’s revenue.
The average unit selling prices for industry products will continue to decline and players will increasingly outsource semiconductor and related-device production to overseas third parties. As US computer manufacturers continue to offshore production and face heavy competition from international manufacturers, the domestic Semiconductor and Circuit Manufacturing industry will follow a similar pattern. And, as manufacturing technology continues to improve, manufacturers will likely phase out existing plants to be replaced by newer facilities. Industry concentration for the US semiconductor market is increasing because there is a trend for larger participants to acquire smaller companies that have fewer resources; however, the trend off offshoring may reduce the advantages of scale enjoyed by vertically integrated designers and manufacturers. Although major players in the industry are expected to continue to expand market share, most industry players are small, specializing in a small number of product lines to serve niche markets. For more information, visit IBISWorld’s Semiconductor and Circuit Manufacturing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry includes firms engaged in manufacturing semiconductors and related devices and parts. Examples of products within this industry include: integrated circuits, memory chips, microprocessors, diodes, transistors and other optoelectronic devices.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.