Worldwide Semiconductor Market Suffers Decline: Gartner

Worldwide semiconductor revenue totalled $255 billion in 2008, down 5.4 per cent, or a decrease of $14.5 billion from 2007 revenue, according to the final market share analysis by Gartner, Inc. The steep decline in the market in the final quarter of 2008, combined with the ongoing economic weakness, signals far worse declines in 2009.

Gartner had earlier warned, "Worldwide semiconductor revenue is forecast to reach $194.5 billion in 2009, a 24.1 per cent decline from 2008 revenue."

“While sales held up fairly well in the first half of 2008, in the third quarter the industry started to soften as the economy slowed, and by the fourth quarter sales were deteriorating quickly, causing revenue growth to go into negative territory,” said Peter Middleton, principal research analyst, Gartner. “With the market heavily impacted by the recession, we can expect considerable market consolidation going forward.”

Gartner’s annual semiconductor market share analysis examines and ranks the worldwide and regional revenue for more than 275 semiconductor suppliers, in 65 separate product categories, and eight major market categories.

Intel held the No. 1 position for the 17th consecutive year, in this analysis, increasing its market share to 13.3 per cent in 2008, although it saw its revenue decline by 0.5 per cent ― a consequence of spinning off its NOR flash memory business. The company outperformed the industry average due to the strong performance of its notebook business in which the company gained share throughout the year.

The best performer amongst the 2008 top 10 in Gartner’s market share analysis was Qualcomm, with growth of 15.3 per cent. This growth was driven by a strong first three quarters of the year, but Qualcomm felt the impact of the economic downturn in the fourth quarter of 2008 as carriers and OEMs reduced their inventory of code division multiple access(CDMA)-based devices and chipsets.

Samsung, the No. 2 vendor, saw its revenue decline 15 per cent in 2008 with the company’s main product lines, DRAM and NAND flash experiencing sharp price declines caused by excess supply in the market during 2008.

Toshiba, in the No. 3 position, saw its revenue decrease 10.3 per cent, largely because its application-specific integrated circuit (ASICs) and application-specific standard products (ASSPs) for consumer, wireless and automotive electronics showed mild growth in early 2008, but the market went into free-fall in the second-half due to the global economic downturn.