SAN FRANCISCOMarket research firm Gartner Inc. Thursday (May 28) issued a revised semiconductor industry revenue forecast that projects 2009 revenue will not fall quite as sharply as the firm predicted in February, thanks to better-than-expected first quarter PC sales.
Gartner (Stamford, Conn.) said it now expects worldwide semiconductor industry revenue to fall to $198 billion in 2009, a 22.4 percent decline from 2008 revenue of $255 billion. In February, Gartner projected a 24.1 percent drop for the year.
"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, in a statement.
Lewis said Gartner expects semiconductor sales to grow 4.9 percent in the second quarter based on revenue guidance issued by chip firms. This growth has caused Gartner to back away from its worst-case scenario of a record down year in 2009, he said.
"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," Lewis said.
Inventory burn in the PC market in the fourth quarter of 2008 and in January and February pushed component demand significantly below PC demand, driving down prices across the board, according to Gartner. The firm's 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 said it expects component prices to stabilize 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 percent decline from 2008, Gartner said. The memory market will be the No. 2 segment for the semiconductor industry, totaling $39.4 billion, a 16.8 percent decline from 2008, according to the latest projections.
The microcomponents segment (including microprocessors, micro controller units, digital signal processors) will drop from the No. 2 spot in 2008 to the No. 3 spot in 2009, Gartner predicted. Microcomponents are projected to reach $37.3 billion, a 23.6 percent decline from 2008, the firm said.
"Consumer spending will remain somewhat depressed due to high unemployment, low housing pricing, and relatively low consumer confidence," Lewis said. "IT budgets are modestly down in 2009, but companies are not spending at the rate of their budgets."