EL SEGUNDO – IHS iSuppli today upped its 2012 forecast for semiconductor growth to 4.3%, citing strong consumer demand for wireless products like cellphones and media tablets. The researchers warned that inventory levels must continue to come down, although progress has been made.

Global semiconductor revenues are expected to reach $324.6 billion in 2012, up from $311.4 billion last year, says IHS.

The research group previously forecast 3.3% this year.

Barring an unforeseen economic slump, revenues should continue to climb during the next few years, hitting approximately $412.8 billion by 2016, the research firm says.

“Semiconductor revenue growth is expected to rise in 2012 compared to last year as consumers begin to believe that the global economic recovery is for real,” said Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS. “The biggest drivers of demand will be consumer-oriented products from the wireless semiconductor segment, such as smartphones and media tablets. The iPhone and iPad from Apple are perpetual bestsellers in their category, but a swarm of competing products will also help enlarge the total pool of offerings and thus increase sales. In particular, semiconductor suppliers can anticipate an exceptionally robust third quarter this year in preparation for strong holiday sell-through.”

Meanwhile, the ultrabook platform will have only a minimal impact in driving revenues in 2012 for the massive semiconductor market, even though the long-term growth potential of the product is strong, IHS says. But with the introduction of Windows 8 and touch-screen capability for the operating system later this year, ultrabooks will have the potential to become a key market revenue driver in 2013.

The three major areas of strength for the semiconductor industry this year will be NAND flash, logic application-specific integrated circuits and microprocessors, says IHS. The revenue increases in NAND and logic ASICs are a result of expected higher sales from tablets and smartphones, while the revenue expansion in MPUs will be driven by renewed growth in notebooks and the gradual emergence of ultrabooks.

Although semiconductor suppliers have reduced their inventory by 7.5% over the last six months, total inventory remains at high levels. As a result, the industry remains in a tenuous position, the research firm says. Further reductions are necessary for manufacturers to experience sustained demand, and companies must continue to monitor inventory levels closely to reduce them through the first half of the year.

The largest portion of inventory is held by IDMs. Since the end of second-quarter 2011, IDMs have reduced their inventory by only 5.4%.

Sustainable growth will not occur until the industry reduces total inventory by at least another 5%, IHS says.

Semiconductor orders are considered a leading indicator for printed circuit board and assembly demand.