LONDON Global chip sales are expected to fall to $219.2 billion next year, a decline of 16.3 percent from what is likely to be achieved in 2008, according to market research group Gartner Inc.
This represents back-to-back annual declines, something the semiconductor industry has never experienced before.
Gartner's preliminary 2008 market share results released last week show 2008 revenue reached $261.9 billion, a 4.4 percent decline from 2007.
Also late last week, Andrew Norwood, research vice president at Gartner, went on record saying that the 2009 chip market will be "considerably worse" than the annual 4.4 percent drop the market research firm was predicting. However, at that time, Norwood declined to share the exact figures it was projecting with EE Times .
Norwood did say that the chip industry would likely bounce back in 2010 and 2011, with global semiconductor revenue reaching $251.2 billion in 2010, a 14.6 percent increase from 2009, and in 2011 revenue reaching $274.9 billion, a 9.4 percent increase from the previous year.
Gartner's last official forecast, issued in mid-November, had expected 2008 worldwide semiconductor revenue to grow 0.2 percent, and for the market to decline 2.2 percent in 2009. However, it now says the financial crisis is having an unprecedented negative impact on fourth quarter 2008 sales and profits.
The company expects semiconductor sales in the fourth quarter of 2008 to show a record quarter-on-quarter decline of 24.4 percent, surpassing the 20 percent decline record set in the second quarter of 2001.
"While many executives may try to compare this downturn to the 2001 tech bubble, this downturn is different in many ways," said Bryan Lewis, research vice president at Gartner.
"This downturn is broad-based, not limited to only technology, has a much different growth profile before the downturn, and has far less inventory buildup. Inventory levels this time have been monitored and more tightly controlled throughout the entire food chain, and this will help the market come back more quickly than in 2001."
In 2001, the semiconductor industry experienced its worst revenue downturn in history, with sales declining 32.5 percent from the previous year. However, that collapse was following two strong revenue growth years in 1999 and 2000 when revenue grew 22 percent and 34 percent, respectively.
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