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Gartner sounds alarm over revenue dip

Posted: 27 Feb 2009 ?? ?Print Version ?Bookmark and Share

Keywords:solar cell? semiconductor market? 2009 IC forecast?

Gartner Inc. has cut its IC forecast, again, predicting that worldwide semiconductor revenue will reach $194.5 billion in 2009, a 24.1 percent decline from 2008 revenue.

The market research firm also warned that its "negative scenario" could reach a 33 percent decline in 2009.

Market conditions have worsened since Gartner's previous forecast. Not long ago, Gartner had forecast 2009 revenue to decline 16 percent. Gartner has removed solar revenue from its semiconductor forecast because solar cells are not traditional semiconductor devices.

The industry is expected to return to positive growth in 2010, growing 7.5 percent, followed by additional growth through 2012. Even with three years of increased revenue, the semiconductor industry will fail to return to 2008 revenue totals.

In 2012, the worldwide semiconductor revenue is projected to reach $253.4 billion, still below 2008 revenue of $256.4 billion.

Market rebound
"We believe that the financial crisis has reset the semiconductor market," said Bryan Lewis, research VP at Gartner, in a statement. "After the 2001 recession, in which semiconductor sales plummeted by a record 32.5 percent, semiconductor sales took about four years to get back to 2000 levels.

"The rebound after this recession will be similar to that in 2001 because there will be three years of modest growth after the worst year. However, we see a difference in year four, where we expect another overcapacity situation for the industry, especially in DRAM, because of significant manufacturing investments made in the second and third years of the recovery," he added.

Believe it or not, the forecast could go lower. Worldwide IC revenue is expected to fall by at least 17 percent sequentially in the first quarter of 2009. There is a strong possibility that the first quarter of 2009 could be worse, and if the market continues with moderate declines in the second and third quarters of 2009, the industry could face a record annual decline.

"Semiconductor suppliers should prepare for Gartner's negative scenario of a 33 percent decline in 2009 revenue," Lewis said. "Tight control of expenses is essential, but suppliers should reconsider dropping their overall research and development (R&D) budgets because focused R&D investments in the recession will help determine the winners in the upturn. Outsourcing and partnerships can help companies get the most from their R&D budgets."

- Mark LaPedus
EE Times

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