Market research IDC has just updated its forecasts for both 2012 and 2013, and down they come. In July, IDC figured that worldwide semiconductor sales this year would increase by 4.6%, but that growth forecast is being toned down to less than 1% at $304 billion. Next year's sales are expected to gain 4.9% to $319 billion, also lower than its previous prediction of 6.2% growth in 2013.
Two of the main culprits to the revision are tough macroeconomic conditions and a struggling PC market. A couple other headwinds include the political dysfunction we like to call the fiscal cliff, as well as decelerating growth in China. Still, it ain't all bad in the semiconductor market.
Shocker: IDC expects that smartphones, tablets, and set-top boxes will be the main growth drivers within the semiconductor in the next few years. Wait, that might not be a shocker, but it's great news for Qualcomm (QCOM 1.62%). Specifically, IDC analyst Mali Venkatesan believes "high-end smartphone demand in developed countries" will remain healthy and developing markets will see continued smartphone adoption amid the shift to 3G data networks.
The mobile chip giant took home a 48.1% revenue share of smartphone applications processors in the second quarter. When you combine that with the 51% market share it boasts in the baseband modem market, investors will see there are plenty of ways for Qualcomm to play the smartphone boom.
Intel's (INTC 0.61%) mobile ambitions are panning out quite differently. While the company enjoys a No. 3 spot with 12% of the baseband market thanks to its acquisition of Infineon years ago, it only collected a minuscule 0.2% share of smartphone processors.
All of this is even before you consider Qualcomm's licensing business, which will also benefit from the shift to 3G in emerging markets. The U.S. is quickly transitioning to 4G LTE, but the rest of the world is still in the midst of moving to 3G data connections.
For example, if you look at the figures in China, 3G penetration still has a long ways to go but it's moving quickly. I track subscriber metrics from the three main wireless carriers and the most recent data from November show 3G penetration among all three at 20.1%, up from 12.2% a year ago. 3G subscribers are up 88% while total subscribers have "only" increased by 14%. That all spells more royalties for Qualcomm.
