IDC predicts more chip market consolidation this year -

Tarot readers working at IDC are predicting that there will be more industry consolidation in the chip market after worldwide semiconductor revenues increased more than 3.7 percent.

IDC said that the industry got through the economic uncertainties in the US and Europe, the earthquake and tsunami in Japan, China's slow down in the second half of the year, and floods in Thailand.

The analyst house, which tracks more than 100 semiconductor companies, said that more than 40 of those companies experienced year-over-year revenue growth greater than five percent, while about the same number of companies saw their revenue decline by more than five percent.  We would have thought that meant zero growth on average which is probably why we are not market analysts.

Intel, with total semiconductor revenues of $51.8 billion in 2011, once again was the overall market leader, which probably surprised no one.

Chipzilla increased its share of the semiconductor market by three percent. Samsung was the number two vendor overall with semiconductor revenues of $29 billion.

Microprocessors had strong growth due to high demand and increased ASPs for Intel's chips. NAND revenues also increased.

DRAM was less successful with revenue falling more than 25 percent due to a supply glut.

DRAM vendor Elpida Memory saw revenue declines of 40 percent in 2011, ultimately leading to its bankruptcy earlier this year.

Mali Venkatesan, research manager, Semiconductors at IDC said that there was a trend toward more integration, as companies try to position themselves for the next phase of growth.

He pointed out that a number of mergers and acquisitions came to fruition in 2011, most notably Qualcomm and Atheros, Texas Instruments and National Semiconductor, SMSC and Conexant, Broadcom and NetLogic, CSR and Zoran, and Microsemi and Zarlink.

He thinks that there will be more mergers and acquisitions in 2012.

Venkatesan is still sticking to his earlier prediction for this year which was that the semiconductor cycle, which started mid-2011, will bottom out in the second quarter of 2012 and fab useage rates will pick up and accelerate in the second half of this year. By the end of the year IDC expects 2012 semiconductor revenue growth to be in the six percent range, Venkatesan said.