Chip Industry Posts 11.3% Rev Growth for 2006

By Colleen Taylor -- Electronic News, 12/7/2006

Worldwide semiconductor revenue totaled $261.4 billion in 2006, an 11.3 percent increase from 2005, according to preliminary results from market research firm Gartner Inc. 

The firm also released its rankings of worldwide chip vendors. Not surprisingly, Intel remained the number one vendor in 2006, even as its revenue declined 9.5 percent. This is the 15th year that Intel has been the top ranked semiconductor vendor, according to Gartner.

Until Q4, however, Intel lost share as its CPUs in the server and consumer enthusiast segments "were inferior to Advanced Micro Devices' in price and performance," the firm said in its latest report. Many PC OEMs increased their offerings of rival AMD-based platforms, and even Intel-only stalwart Dell ultimately opened its arms to AMD across mobile, desktop and server product families. Revenue was further eroded by an across-the-board price war, with Intel having more to lose as the larger vendor, Gartner said.

Samsung Electronics continued to gain share, as it accounted for 7.9 percent of the market. Samsung now dominates most areas of the memory market, holding the number one position in DRAM, SRAM and the NAND flash markets, Gartner said.

AMD moved into the top 10 in 2006. Gartner has included full year 2006 revenue for ATI, with which AMD recently merged, in its latest report's results; combining AMD's and ATI's results for 2005, the combined entity grew semiconductor revenue by a staggering 32.1 percent, the firm said.

Though October monthly semiconductor sales were "softer than expected on persistent inventory concerns," the firm said, Gartner expects the remaining two months of the quarter to show moderate improvement driven by ongoing strength in DRAM coupled with strong consumer electronics sell-through at retail. These factors, combined with industry-wide reductions in capacity utilization, should propel the industry to high single-digit revenue growth in 2007, the firm said. Gartner said it also expects the recently bloated inventory levels to return to normal by the end of Q1 2007.