Semiconductor revenue expected to grow through 2014, Gartner says

Analysts at the research company have forecast that 2010 will show 27.1% revenue growth on 2009's $228 billion for $290 billion in revenue. 2011 is then expected to reach $307 billion. Growth is expected to continue through 2014, Gartner said.

Suzanne Deffree, Managing editor, news -- EDN, June 4, 2010

2010 will be the first year in a series to show continuous revenue growth for the semiconductor industry, according to the latest outlook by Gartner Inc.

Analysts at the research company have forecast that 2010 will show 27.1% revenue growth on 2009's $228 billion for $290 billion in revenue. 2011 is then expected to reach $307 billion. Growth is expected to continue through 2014, Gartner said.

The 2010 estimate is an improvement on previous forecasts from Gartner that in Q1 projected worldwide semiconductor sales to grow 19.9%. Gartner said this improvement in market conditions is in part due to an accelerated broad-based recovery in all regions and most product categories.

"Sequential semiconductor growth has been very strong over the last five quarters, well above seasonal norms, and manufacturing capacity is tight" said Bryan Lewis, research vice president at Gartner, in a statement. "Chip revenue growth is clearly outpacing system revenue growth and that is a concern. Gartner's new semiconductor forecast has below-average growth in the second half of 2010 as we are anticipating a minor correction to realign semiconductor sales with electronic system sales. Even with this minor correction, we are still expecting very strong growth and record semiconductor sales in 2010."

In this quarter's update, Gartner raised production forecasts for PCs, mobile phones, automotive, and select consumer products. Notably, the PC and mobile phone markets will account for about 40% of the semiconductor market's growth in 2010. In the PC market, processor ASPs (average selling prices) are firming, and 2010 PC processor revenue is now expected to grow 15.5%, up from 10.0% in the previous update, Gartner said. Gartner in May estimated PC shipments will climb 22% this year.

"Strong PC growth coupled with rising DRAM prices is causing the 2010 DRAM market to surge 78%, making it the strongest-performing semiconductor device market," Gartner reported. "Analysts believe that the demand for media tablets, such as Apple's iPad, will noticeably impact the PC market by 2013, further fueling growth in this category. However, in the near-term, these devices will have a minimal impact on PC and smartphone markets."