Monday, November 22, 2010

#MARKETS: "3 Reasons Tech Recovery Is Stalling"

Global semiconductor revenue in 2011 will likely grow only about 5 percent, compared with 30 percent in 2010, muting expectations for the rest of the IT sector. Analysts' reasons for this trend are threefold: stubborn unemployment, tight credit availability and the lack of recovery in the housing market. Look for continued steady growth, but at a more sustainable pace or five to seven percent for the next five years. R. Colin Johnson, Kyoto Prize Fellow @NextGenLog

Tech sector rebound in 2010 has already regained the lost ground from the 2008 recession, but growth rate will cool to a sustainable 5 percent until 2014.

Here is what my Smarter Technology story says about the recovery: Market analysts at iSuppli Corp. (El Segundo, Calif.) recently predicted that the spectacular semiconductor market recovery in 2010 was cooling, on track for a modest 5.1 percent gain in 2011, compared with the meteoric 32 percent increase predicted for 2010. The reasons, however, are not directly related to semiconductors, fueling predictions that IT sector growth will be stunted next year too. Depleted inventories from recession-induced belt-tightening combined with stronger-than-expected consumer demand in 2010 prompted stellar 32 percent semiconductor market growth in 2010—up to $302 billion from just $205 billion in 2009, according to iSuppli. However, now that inventories have been renewed, three more general economic problem areas will mute growth next year, slowing semiconductor buying trends to just 5.1 percent growth in 2011—up just $15.4 billion to $317.4 billion. Slow steady growth will continue in 2012, according to iSuppli, reaching $357.4 billion by 2014...
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