Worldwide Semiconductor Revenue to Decline 22 Per Cent in 2009, Says Gartner

STAMFORD, Conn., May 28, 2009 — Worldwide semiconductor revenue is forecast to reach $198 billion in 2009, a 22.4 per cent decline from 2008 revenue of $255 billion, according to the latest projections by Gartner, Inc. This outlook is slightly better than the first quarter projections, when Gartner forecast semiconductor revenue to decline 24.1 per cent in 2009.

"First quarter PC shipments came in better than expected, which led to an improved outlook for microprocessors, but we believe most of this improvement was due to the fact that inventories had been run down too far, rather than true demand returning," said Bryan Lewis, research vice president at Gartner.

"We are expecting 4.9 per cent growth in second quarter semiconductor sales based on recent semiconductor company guidance, and this positive movement has caused us to move away from our 1Q09 worst-case scenario of a record down year in 2009. While this is positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China," Mr Lewis said.

Inventory burn in the PC market in the fourth quarter of 2008 and in January and February 2009 pushed component demand significantly below PC demand, driving down prices across the board. Gartner analysts said PC vendors that started cutting inventory early were able to achieve significant savings on bill of materials. As the inventory correction swings in the opposite direction, Gartner expects component prices to stabilise through the year.

Application-specific standard product (ASSP) will continue to lead semiconductor revenue, as it is forecast to total $51.9 billion in 2009, a 24.2 per cent decline from 2008. The memory market will be the No. 2 segment for the semiconductor industry, as it totals $39.4 billion, a 16.8 per cent decline from 2008. The microcomponents segment (microprocessors, micro controller units, digital signal processors) will drop from the No. 2 spot in 2008 to the No. 3 spot in 2009. Microcomponents are projected to reach $37.3 billion, a 23.6 per cent decline from 2008.

"Consumer spending will remain somewhat depressed due to high unemployment, low housing pricing, and relatively low consumer confidence," Mr Lewis said. "IT budgets are modestly down in 2009, but companies are not spending at the rate of their budgets."

Gartner has removed solar revenue from its semiconductor forecast because solar cells are not traditional semiconductor devices (solar cells focus on energy generation and are not components in an electronic system), and their high growth rates were distorting the true growth of the semiconductor industry. Gartner is expanding its coverage in solar and will provide detailed technology forecast breakouts in separate reports.

Gartner analysts will provide additional analysis in the complimentary briefing “Gartner Semiconductor Briefing: Strategies for Industry Recovery” on June 11 at the San Jose Double Tree Hotel in San Jose, California. Gartner analysts will examine the current state of the IT industry, and discuss how various sectors are responding to the economic conditions. Gartner analysts will provide their recession end indicators for the semiconductor industry, as well outline key strategies for financial viability in the semiconductor industry. The complete agenda is available on Gartner’s Web site at

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