Worldwide semiconductor revenue is set to reach $299bn, a 0.1% decrease from 2010, according to IT research firm Gartner.
In its earlier projection in the second quarter, Gartner expected the market to grow by 5.1% in this year.
Excess inventory, manufacturing overcapacity and slowing demand due to economic weakness are responsible for this short-term outlook.
Gartner research vice president Bryan Lewis said semiconductor companies’ third-quarter guidance is well below seasonal averages, and the current guidance by vendors points to flat to down third-quarter growth.
"Typically, we see guidance for 8 to 9 percent growth in the third quarter because of back-to-school and the holiday build. The supply chain is also showing significant slowdown, and semiconductor-related inventory levels are still elevated," Lewis said.
Gartner has predicted a growth of 3.4% in the semiconductor revenues for PC production, which is 6.1% less than its prediction in the last quarter.
Gartner said mobile phone production unit growth is projected to 11.5% in this recent outlook, lower than its previous quarter prediction at 12.9%.
Reduced PC demand and falling prices have severely impacted DRAM, which is now expected to decline 26.6% in 2011.
NAND flash and data processing ASIC will see a growth of about 20% in 2011, due in part to the strong growth in smartphones and iPads.
"We have lowered our 2012 semiconductor forecast from 8.6% to 4.6% due to a worsening macroeconomic outlook," Lewis said.
"However, the odds of a double-dip US recession continue to rise and are raising fear that sales prospects will deteriorate further."
