The ECRI U.S. weekly leading economic indicators are pointing to a weakening of the U.S. economy in mid-2010, resulting in a slowdown in semiconductor revenues.

Personal consumption will remain sluggish in the second half of 2010 because of an ongoing jobless recovery, further deterioration in credit and continued weakness in home prices.

The ECRI U.S. weekly leading indicator forecasts economic conditions approximately six months in the future.

The U.S. is the largest consumer electronics market. In 2009, 20% of the global consumer electronics revenue came from purchases in the U.S./Canada, followed by Western Europe, with 19%. Weak consumer demand in 2010 will translate to weak chip sales.

Semiconductor revenue will grow 11.2% in 2010 to $245 billion, up from $220 billion in 2009.

Lower chip sales will also impact capex.

Forecasts are pointing to global capex growing more than 50% in 2010. With the slowdown in chip sales, semiconductor manufacturers will reduce capex to the 20% range.

Europe's recovery lags other large regions. Prospects for the retail and consumer goods sector as well as for the automotive industry remain poor. Weak domestic demand will constrain growth in the second half of 2010.
Robert N. Castellano, Ph.D, is President of The Information Network, a leading consulting and market-research firm for the semiconductor, LCD, HDD and solar industries. Castellano is internationally recognized as one of the leading experts in these areas. He has nearly 25 years of expertise as an industry analyst. Castellano has provided insight on emerging technologies to many business and technical publications, including Business 2.0, BusinessWeek, The Economist, Forbes, Investor's Business Daily, Los Angeles Times Magazine, The New York Times, USA Today and The Wall Street Journal. He is a frequent speaker at conferences and corporate events. He has over 10 years' experience in the field of wafer fabrication at AT&T Bell Laboratories and Stanford University before founding The Information Network in 1985. He has been editor of the peer-reviewed Journal of Active and Passive Electronic Devices since 1985. He is author of the book "Technology Trends in VLSI Manufacturing," published by Gordon and Breach. His book "Solar Cell Processing" was published in 2009 by Old City Publishing. He received his Ph.D. in solid state chemistry from Oxford University.