2009 Will Be Worst Year For Semiconductor Market

by CXOtoday Staff    Feb 26, 2009

The impact of the financial crisis will result in the semiconductor industry experiencing near-record revenue declines in 2009, according to Gartner. Worldwide semiconductor revenue is forecast to reach $194.5 billion in 2009, a 24.1 percent decline from 2008 revenue.

Market conditions have worsened since Gartner’s previous semiconductor outlook in mid-December of 2008. At that time, Gartner had forecast 2009 revenue to decline 16 percent.

The industry is expected to return to positive growth in 2010, growing 7.5 percent, followed by additional growth through 2012. Even with three years of increased revenue, the semiconductor industry will fail to return to 2008 revenue totals. In 2012, the worldwide semiconductor revenue is projected to reach $253.4 billion, still below 2008 revenue of $256.4 billion.

"We believe that the financial crisis has reset the semiconductor market," said Bryan Lewis, research vice president at Gartner. "After the 2001 recession, in which semiconductor sales plummeted by a record 32.5 percent, semiconductor sales took about four years to get back to 2000 levels.

"The rebound after this recession will be similar to that in 2001 because there will be three years of modest growth after the worst year. However, we see a difference in year four, where we expect another overcapacity situation for the industry, especially in DRAM, because of significant manufacturing investments made in the second and third years of the recovery," Lewis said.

Worldwide semiconductor revenue is expected to fall by at least 17 percent sequentially in the first quarter of 2009. There is a strong possibility that the first quarter of 2009 could be worse, and if the market continues with moderate declines in the second and third quarters of 2009, the industry could face a record annual decline. Gartner analysts warned that Gartner’s negative scenario could reach a 33 percent decline in 2009.

 

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