Semiconductor revenue in massive fall, Gartner says

Semiconductor revenue during the first quarter was US$45.2 billion, a drop from $65.5 billion in Q1 last year

The recession continues to weigh on the worldwide semiconductor industry, which recorded a giant revenue drop in the first quarter of 2009, Gartner said on Wednesday.

The revenue drop underlined a significant year-over-year revenue drop Gartner has predicted for the entire 2009. Semiconductor revenue during the first quarter was US$45.2 billion, a drop from $65.5 billion in last year's first quarter.

Revenue will bottom out by the middle of 2009, with sustained growth expected to start in the second quarter of 2010 when demand for products increases, said Paul Middleton, a research analyst with Gartner.

Worldwide semiconductor revenue is expected to reach US$194.5 billion in 2009, a 24.1 percent decline from 2008 revenue. That could be the worst possible revenue decline that the semiconductor industry has seen since the Internet bubble burst in 2001, when semiconductor sales plummeted by a record 32.5 percent, Gartner has said.

Reduced spending on products like PCs and cell phones has seriously impacted semiconductor revenue, Middleton said. Those products use semiconductors and represent about one-third of the industry's revenue.

Spending on PC products could start recovering after reaching rock bottom in the first quarter of 2009, but that won't fix overall revenue woes. Spending on mobile phones may bottom out in the third quarter of this year, which will continue to have an adverse effect on semiconductor revenue this year.

In this down cycle, semiconductor manufacturers are seeing dropping profits and reduced revenue that could lead to consolidation, Middleton said.

He declined to name particular companies that may be up for grabs, but said larger players could gobble up smaller players. An acquisition is a key strategy that helps buyers acquire customers and intellectual property from erstwhile competitors, while also reducing competition in the space.

Chip makers are also cutting back on capacity in fabrication plants to adapt to the reduced demand during the recession.

Gartner also said in a study released Wednesday that Intel recorded the top semiconductor revenue during 2008, followed by Samsung, Toshiba and Texas Instruments (TI).

Intel's semiconductor revenue for 2008 was $33.8 billion, a 13.3 percent market share, but a 0.5 percent decline from the previous year. Samsung saw a massive 15 percent year-over-year decline to US$17.4 billion. Toshiba and TI were a close third and fourth, seeing their revenue drop 10.3 percent and 10 percent, respectively.

Companies like Elpida did relatively better, showing only slight decline because of a stronger DRAM supply chain than the larger companies, Middleton said.

Overall semiconductor revenue for 2008 was $255 billion, a 5.4 percent drop from 2007 revenue, Gartner said in the study.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Gartnereconomic downturnsemiconductor2009

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Agam Shah

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?