Semiconductor revenue declines

Gartner sees forecasts improvement in 2010

Worldwide semiconductor revenue is on track to total $212 billion in 2009, a 17.1 percent decline from 2008 revenue of $255 billion, according to the latest outlook by Gartner.

This forecast is better than the second quarter projections when Gartner projected semiconductor revenue to decline 22.4 percent this year.

“The semiconductor market has performed better than expected, as was evident when second quarter semiconductor revenue increased 17 percent in sequential sales,” said Bryan Lewis, research vice president at Gartner. “Consumers reacted strongly to reduced PC and LCD TV pricing as price elasticity was amazing. The industry also benefited from the China stimulus package that worked remarkably well to boost short-term demand. Governments worldwide took action quickly and extensively to avoid a meltdown, and it worked.”

Some of the leading semiconductor vendors reported positive second quarter sequential revenue growth that bodes well for the PC and cell phone segments.

While the outlook for 2009 has improved, Gartner analysts point out that all major segments of the semiconductor market are expected to experience double-digital declines in revenue this year. The largest segment of the semiconductor market, application-specific standard product (ASSP), will reach $57.2 billion in 2009, but this is a 16.5 percent decline from 2008 revenue.

While the industry did see some better than expected results in the second quarter of 2009, the question is can this optimism be sustained through 2010. Gartner’s latest outlook for 2010 is worldwide semiconductor revenue to total $233 billion, a 10.3 percent increase from 2009 projections.