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Gartner raises chip market estimate

Posted: 11 Dec 2006 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? Gartner? semicon? semiconductors? IC?

Worldwide semiconductor revenue totaled $261.4 billion in 2006, an 11.3 percent increase from 2005, according to preliminary results from Gartner Inc. In addition, the market research company expects the current inventory correction to be complete by the end of the first quarter of 2007, giving rise to high single-digit percentage revenue growth in 2007.

The 2006 figure is a sharp increase from Gartner's previous estimate that the semiconductor market would rise "8 or 9 percent" given in October.

"Strong growth in DRAM picked up in 2006 where NAND flash left off the year before," said Jeremey Donovan, research director at Gartner, in a statement. "Outside of DRAM, wireless semiconductor sales once again drove strong performance in the industry."

Despite suffering a 9.5 percent revenue decline, according to Gartner's estimates Intel will remain the top chip vendor in 2006. Up until the fourth quarter, Intel lost share as its CPUs in the server and consumer enthusiast segments were displaced by those from Advanced Micro Devices Inc. (AMD) Revenue was further eroded by an across-the-board price war, with Intel having more to lose as the larger vendor.

Meanwhile Samsung Electronics Co. Ltd. continued to gain share, as it accounted for 7.9 percent of the market. Samsung now dominates most areas of the memory market, holding the No. 1 position in DRAM, SRAM and the NAND flash markets.

AMD moved into the top 10 in 2006 partly as a result of the acquisition of ATI. Combining AMD s and ATI s results for 2005 showed that the combined entity grew semiconductor revenue by 32.1 percent.

"During the past two years, Elpida has increased its DRAM market share by adding huge amounts of capacity internally and through foundry partners, Powerchip Semiconductor and SMIC," Donovan said. "This market share gain was made easier because the major DRAM vendors, such as Samsung and Hynix, focused on the higher-bit-growth NAND flash market."

In 2006 Micron Technology Inc., known as DRAM manufacturer, has experienced the downside of its product diversification strategy into CMOS image sensors and NAND-flash. With the DRAM market picking up Micron is set to post slower growth than its DRAM-focused peers.

Though October semiconductor sales were softer than expected on persistent inventory concerns, Gartner expects the remaining two months of the quarter to show moderate improvement, driven by ongoing strength in DRAM coupled with strong consumer electronics sell-through at retail.

These factors, combined with industry-wide reductions in capacity utilization, should propel the industry to high single-digit revenue growth in 2007, the market watcher said. Gartner expects inventory levels to return to normal by the end of the first quarter of 2007, one quarter earlier than the correction that occurred in 2004 and 2005.

- Peter Clarke
EE Times Europe

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