Semiconductor revenue in massive fall, Gartner says

Semiconductor revenue during the first quarter was US$45.2 billion, a drop from $65.5 billion in Q1 last year

The recession continues to weigh on the worldwide semiconductor industry, which recorded a giant revenue drop in the first quarter of 2009, Gartner said on Wednesday.

The revenue drop underlined a significant year-over-year revenue drop Gartner has predicted for the entire 2009. Semiconductor revenue during the first quarter was US$45.2 billion, a drop from $65.5 billion in last year's first quarter.

Revenue will bottom out by the middle of 2009, with sustained growth expected to start in the second quarter of 2010 when demand for products increases, said Paul Middleton, a research analyst with Gartner.

Worldwide semiconductor revenue is expected to reach US$194.5 billion in 2009, a 24.1 percent decline from 2008 revenue. That could be the worst possible revenue decline that the semiconductor industry has seen since the Internet bubble burst in 2001, when semiconductor sales plummeted by a record 32.5 percent, Gartner has said.

Reduced spending on products like PCs and cell phones has seriously impacted semiconductor revenue, Middleton said. Those products use semiconductors and represent about one-third of the industry's revenue.

Spending on PC products could start recovering after reaching rock bottom in the first quarter of 2009, but that won't fix overall revenue woes. Spending on mobile phones may bottom out in the third quarter of this year, which will continue to have an adverse effect on semiconductor revenue this year.

In this down cycle, semiconductor manufacturers are seeing dropping profits and reduced revenue that could lead to consolidation, Middleton said.

He declined to name particular companies that may be up for grabs, but said larger players could gobble up smaller players. An acquisition is a key strategy that helps buyers acquire customers and intellectual property from erstwhile competitors, while also reducing competition in the space.

Chip makers are also cutting back on capacity in fabrication plants to adapt to the reduced demand during the recession.

Gartner also said in a study released Wednesday that Intel recorded the top semiconductor revenue during 2008, followed by Samsung, Toshiba and Texas Instruments (TI).

Intel's semiconductor revenue for 2008 was $33.8 billion, a 13.3 percent market share, but a 0.5 percent decline from the previous year. Samsung saw a massive 15 percent year-over-year decline to US$17.4 billion. Toshiba and TI were a close third and fourth, seeing their revenue drop 10.3 percent and 10 percent, respectively.

Companies like Elpida did relatively better, showing only slight decline because of a stronger DRAM supply chain than the larger companies, Middleton said.

Overall semiconductor revenue for 2008 was $255 billion, a 5.4 percent drop from 2007 revenue, Gartner said in the study.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags Gartnereconomic downturnsemiconductor2009

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

Agam Shah

IDG News Service
Show Comments



Sansai 6-Outlet Power Board + 4-Port USB Charging Station

Learn more >



Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?