LEDs shine amidst a gloomy semiconductor industry

November 22, 2012 // By Christoph Hammerschmidt
The growth of the industrial electronics market will fall short of expectations in 2012, says market research company iSuppli. The only bright spot in this murky environment is the LED market.

Second-quarter LED sales for Philips climbed 37 percent from year-ago levels, and other LED lamp suppliers like Cree, LG Innotek and Samsung LED also enjoyed solid second-quarter results.

There were few other manufacturers that performed well during the period, scattered throughout various segments. Among them were Honeywell with 8 percent growth, driven by commercial avionics; General Electric with an industrial sales increase in the double digits, on the strength of a 27 percent rise in transportation; and Alstom, ABB, Delta and Mindray in other industrial sales segments.

In contrast, many chip companies were affected by the downturn, and many of them do a big deal of their business in industrial market segments. Examples are Texas Instruments, Analog Devices Inc., Infineon Technologies, Atmel, Fuji Electric and Linear Technology. Manufacturers that have lowered their 2012 outlook because of weaker orders include Danaher, Siemens, Bombardier, Agilent, Vestas and Johnson Controls.

This year will bring the slowest growth for the next four years, with revenue set to rise in a range from 7 to 12 percent during each of the next four years. Revenue is forecast to reach $44.8 billion by 2016, as shown in the figure attached.

“The chip revenue forecast was dialed back after economic headwinds got stronger in the second quarter, affecting several top semiconductor suppliers and original equipment manufacturers of industrial electronics,” said Jacobo Carrasco-Heres, industrial electronics analyst at IHS. “And when hoped-for growth did not pan out as expected and sales eventually came out lower, the market was downgraded to reflect the changed circumstances.”