“Semiconductor firms are more cyclical than other kinds of tech companies,” according to Morningstar analyst Robert Goldsborough. “The sector continually faces high research-and-development expenses and capital costs for manufacturing facilities, short product cycles, and cyclical end-user demand.”
IC Insights’ McClean Report calculated that spending on research and development by semiconductor companies expanded 7% in 2012 while the overall sector declined 1%, ElectroIQ reports.
Given that U.S. consumers and business return to normal demand, Linx Consulting expects growth to increase at a modest pace over 2013 and average slightly less than 6% for the full year, ElectroIQ added in a separate article. The consulting firm projects recovered growth to average 7% per year by 2014 as semiconductors continue to meet the demand for flash memories and advanced foundry logic devices used in tablets and phones.
SPDR S&P Semiconductor ETF
For more information on the tech sector, visit our technology category.
Max Chen contributed to this article.