Intel leads semiconductor vendors despite slump in 2006

Intel will repeat as the largest semiconductor vendor in the world for 2006, despite watching revenue drop 9.5 percent in a growing market, Gartner said.

Despite a revenue plunge of 9.5 percent, Intel will retain its title as king of the hill for the worldwide semiconductor industry, posting annual revenue of US$31.3 billion for 2006, according to analyst Gartner.

Intel's top competitors will post much better numbers, all recording double-digit revenue growth as they enjoy strong sales in dynamic RAM (DRAM) memory chips, wireless semiconductors and NAND flash, according to preliminary results for 2006 that Gartner released Thursday.

Overall, the market is set to grow 11.3 percent to US$261.4 billion. Intel's sinking results in this rising tide will cause its market share to sag from 14.7 percent in 2005 to 12 percent. The company was only able to record its 15th straight year as a market leader because it had banked such a large lead on smaller rivals like Samsung Electronics Co. (with 7.9 percent market share) and Texas Instruments (4.5 percent).

Intel's problem was that its competitor Advanced Micro Devices (AMD) sold superior processors through the third quarter, judging by the chips' balance of price and performance in the server and consumer enthusiast segments, Gartner said. Intel lost even more revenue as the two companies launched a price war, which hurt Intel more than AMD as the larger company.

Meanwhile, Samsung strengthened its position as the industry's second-biggest vendor by selling more DRAM, static RAM (SRAM) and NAND flash chips than any other company.

Samsung will grow 12.4 percent to reach revenues of US$20.6 billion, followed by Texas Instruments growing 17.4 percent to US$11.9 billion and Infineon Technologies AG growing 29 percent to reach US$10.6 billion, Gartner said. The bottom half of the top 10 were all predicted to record revenue of single-digit billions, including STMicroelectronics, Toshiba, Renesas Technology, Hynix Semiconductor, AMD and Freescale Semiconductor.

The semiconductor industry will grow more slowly in 2007, likely rising by a high single-digit percentage compared to its 11.3 percent rise in 2006, Gartner said. The high points of the coming year will include continuing strength in the DRAM market and strong consumer electronics sales.

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