SAN FRANCISCOThe market for system ICsincluding application specific ICs (ASICs), application-specific standard products and programmable logic devicesis poised to return to sequential growth in the third quarter after watching its revenue fall by nearly one third over the past six months, according to market research firm iSuppli Corp.
Global "core silicon" revenue is set to rise to $19 billion in the third quarter, up 8.3 percent from $17.6 billion in the second quarter, the firm projected. This will mark the first sequential rise since the third quarter of 2008, iSuppli (El Segundo, Calif.) said.
But the firm projects that the core silicon market will not return to year-over-year growth until the first quarter of 2010. After a 24.2 percent decline in 2009, revenue will bounce back to double-digit growth in 2010, with a 10.1 percent increase for the year, iSuppli predicted.
The core silicon chip market is defined by iSuppli as the key chips that implement the specific, individual functionality in an electronic system. This includes, for example, the IC that makes a DVD player a DVD player and not some other type of system, according to the firm.
Jordan Selburn, a principal analyst at iSuppli, said through a statement that the current downturn is fundamentally different than any previous semiconductor cycle.
"This cycle is driven by forces external to the chip industry, primarily the global economy, that are impacting both business and consumer spending," Selburn said. "It's unclear even to economic experts and financial czars when the various bailouts and reductions in interest rates will turn the global economy around."
According to Selburn, while some electronic product markets such as desktop PCs and 1G and 2G mobile handsets are expected to suffer a decline in unit shipments from 2008 to 2009, otherssuch as 3G wireless phones, netbook PCs and set-top boxesare still expected to grow despite the recession.
"These markets alone will be enough to keep the core silicon market moving down the tracks toward an expected expansion in 2010," Selburn said.
According to Selburn's projections, second quarter core silicon revenue will fall to $17.6 billion, a decline of 34 percent from $26.6 billion in the third quarter of 2008, marking the bottom in the current downturn.
Selburn's latest report on the core silicon market is available for sale by iSuppli through the company's website.
Earlier Tuesday (May 5) market research firm The Information Network said signs are pointing to a global recovery in the IC sector, but vendors of semiconductor manufacturing equipment are unlikely to experience an upswing before at least August.