Gartner: Chip industry in 'indefinite' slowdown

The global semiconductor industry is in a slowdown that one industry analyst doesn't see it coming out of time soon, if ever.

The global semiconductor industry is in a slowdown that one industry analyst doesn't see it coming out of time soon, if ever.

Worldwide semiconductor revenue totaled $US273.9 billion last year, up just 3.8 per cent from 2006, according to a report from Gartner. For an industry that's accustomed to double-digit growth, the growth last year was noticeably slight. However, it's a result that the industry may have to get used to, according to Gartner analyst, Richard Gordon.

"Obviously, it's better than negative growth, but from a historic semiconductor view, it's not strong growth," Gordon told Computerworld. "The market is in a low-single-digit growth phase. It's a concern. The high growth of the late '90s seems to be in the past now. I don't see anything on the horizon that will fuel growth in the near future. We're talking about long-term - about forever."

He added that he simply doesn't see any major new growth drivers - like the PC and cell phone were - on the horizon. "It just seems to be more of the same," Gordon said. "From a demand point of view, there will definitely be volume growth, but pricing pressure will continue. We are concerned that we're in an indefinite low-revenue growth phase."

So what does the slowdown mean for users? It could mean lower chip prices for consumers and businesses, as well as an atmosphere conducive to semiconductor industry consolidation, according to Gartner.

Gordon declined to speculate on which companies might hang on and which might get gobbled up.

"I wouldn't like to name any names, but it's really the mid-tier," he noted. "The Intels and Samsungs are strong enough to survive on their own, but the mid-tiers are more questionable. Advanced Micro Devices is a tricky one. They've done quite a bit already in terms of sorting out their cost base. They have partnerships with the likes of IBM. They have had to reinvent themselves quite a bit. They're in a unique position because they're really only competing with Intel. I can't see anything happening there."

With the semiconductor market slowing and the US economy stumbling, 2007 was a mixed year for processor manufacturers. Gartner's numbers show that three vendors had double-digit growth, while four vendors suffered through revenue declines.

Intel's revenue increased by 10.7 per cent between 2006 and 2007 and the company remained the largest on Gartner's Top 10 list. Toshiba, meanwhile, reported the highest revenue growth rate -- 20.8 per cent. Toshiba's gains moved it up from the sixth largest semiconductor vendor in 2006 to the third largest last year, right behind Intel and Samsung Electronics.

"That was quite a strong performance for Toshiba -- probably the best performing of the Japanese companies over the last few years," said Gordon. "They do a lot of business with game console makers, like Sony ? and they're strong in the flash market."

AMD didn't fare well in 2007, with revenue declining by 20.9 per cent according to Gartner. The company, though, did retain its spot as the ninth largest industry player.

AMD struggled not only financially in 2007, Gordon said, noting that product delays also dealt it a market share and mind share blow. The delays came just as rival, Intel, was shipping its new quad-core and 45 nanometre processors.

"It's an issue of competitiveness in high-end processors," said Gordon. "[AMD] had to reduce pricing to try to ship products into the mainstream market. And a delay in chips didn't help. There was an issue with integrating the acquisition of ATI Technologies. These things are always tricky to do. They're also suffering from Intel's rebound. Pretty much across the board, they struggled a bit last year."

AMD, though, seems to be getting its footing again, pushing out a graphics chipset in early March and a slew of new desktop processors last week.

With the first AMD Barcelona-based systems expected to hit the market in April, and a 65-watt quad-core desktop chip and a triple-core desktop chip now in the mix, AMD may be starting to kick back into gear.

This renewed life has some analysts wondering if the chip war between AMD and Intel might be back on track. And if it is, they say that could only mean good things - like lower chip prices and more innovation - for buyers.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Sharon Gaudin

Computerworld
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?