Semiconductor revenue to rebound in 2010 after smaller-than-expected 2009 decline
According to Gartner, revenue is on pace to total $226 billion in 2009, compared to 2008 revenue of $255 billion. Revenue is expected to bounce back in 2010 with a 13% increase.
By Suzanne Deffree, Managing Editor, News -- EDN, November 16, 2009
Gartner Inc today once again revised its 2009 forecast upward, now estimating the year will see worldwide semiconductor revenue decline 11.4% and further predicting 2010 will see sales rebound to 2008 levels.
According to the market research company, semiconductor revenue is on pace to total $226 billion in 2009, compared to 2008 revenue of $255 billion. The expected drop is less than half of the company's original projections for the year's decline. The company had estimated in Q1 that revenue could fall more than 24%. In Q4, that projection was revised to a 22.4% drop. And Gartner in Q3 revised its estimated 2009 semiconductor revenue decline to 17.1%.
Crediting inventory replenishment, government stimulus packages, price elasticity on consumer products, and "amazingly strong" consumer high-tech spending, Gartner reported that the semiconductor market's recovery is well under way and that its outlook continues to improve as semiconductor suppliers post outstanding quarterly results. Gartner said Q2 showed close to 17% growth for the industry, while Q3 experienced almost 20% growth. Company guidances for Q4 are also well above the seasonal norm, signaling continued expansion of a strong semiconductor industry recovery, Gartner said.
Looking to 2010, Gartner said semiconductor revenue is expected to bounce back to the same revenue level as 2008 at $255 billion, a 13% increase from 2009.
“The most significant changes for the semiconductor industry came from application-specific standard products (ASSPs), memory, and compute microprocessors, as all three products benefited from a strengthening PC market,” said Bryan Lewis, research VP at Gartner, in a statement this morning. “ASSPs and memory, primarily NAND flash, also benefited from an improved outlook for cell phones.
“The revenue forecast for the commodity memory market — DRAM and NAND flash — has improved because of the stronger demand outlook, which means that pricing has strengthened more than previously forecast,” Lewis said.
According to Gartner, PCs are the single largest application driving the semiconductor rebound. The company said PC unit growth projections dramatically improved from double-digit declines at the start of 2009 to a current low-single-digit positive outlook, allowing for lesser declines for MPUs and DRAM.
“Both device types experienced lower revenue declines than the industry average, and DRAM began to be profitable for some vendors in the third quarter of 2009 after almost three years of losses,” Lewis said. “While most of the news has been positive to date, recent channel checks in Taiwan indicate there is concern that PC orders are slowing earlier than the seasonal norm and that 2010 may get off to a slow start.”
Gartner is scheduled to update its Q4 semiconductor forecast again on November 24 via teleconference.
