While the market remains strong for many semiconductor categories, the NAND flash memory market has "fallen apart" over the past two months, Lewis said.

Citing slowing demand across the U.S. and Europe due to macroeconomic factors and an inventory glut, Gartner projects 2008 NAND flash revenue will be $13.9 billion, down 10.1 percent from 2007.

"The flash market went from looking like it was going to be up to looking like it is going to be down significantly," Lewis said. "Flash demand has softened. There is a lot of inventory out there, and vendors are getting aggressive on pricing."

Gartner expects a NAND flash recovery in the second half of 2009 and is projecting NAND revenue to be up 16 percent next year and up 19.5 percent in 2010. Longer term, Gartner expects limited profitability for NAND flash in 2011 and 2012 because of a supply induced downturn.

EE Times reported Wednesday (Sept. 3) that Gartner revised its 2008 and 2009 semiconductor forecasts downward, blaming the flash memory market and other factors.