PC chip sales skyrocket, signaling a market on the mend

IDC reports Q3 shipments up surprising 23 per cent; researcher still wary about 2010

In good news for the semiconductor industry, IDC today reported that worldwide computer chip shipments skyrocketed in the third quarter.

After chip makers struggled through quarter after recent quarter due to a down economy that tightened consumer and corporate budgets, third quarter PC microprocessor shipments jumped 23 per cent compared to the previous quarter, according to IDC. Analysts there credited the sharp uptick on the increasing popularity of low-cost mobile computers.

IDC reported that shipments of mobile PCs, including netbook computers based on Intel's Atom processor , grew by 35.7 per cent from the second quarter. Meanwhile, desktop PC processors grew at a more moderate 11.4 per cent quarter over quarter while shipments of x86 server processors grew at a rate of 12.2 per cent.

"The story about 3Q '09 leads with Atom processors being sold in mini-notebooks manufactured and sold in China," said IDC analyst Shane Rau in a statement. "While Atom processors led the PC processor market to reach record unit shipments, on the revenue side, their low average selling price led to notable price erosion, more than 7 per cent. As a result, while market shipments rose 23 per cent compared to 2Q '09, market revenue grew less, 14.1 per cent compared to 2Q09."

Rau added that one of the most notable aspects of third-quarter performance is that PC processor shipments overall exceeded shipments in the third quarter of 2008, which was a record quarter at the time.

"We know that the processor market is recovering," he said.

Based on the market's recent performance and strong indicators moving into the fourth quarter, IDC today raised its forecast for PC processor shipments in 2009 to more than 300 million units and a unit growth rate of 1.5 per cent compared to 2008.

"Compared to where the market was at the beginning of 2009, PC processors have come back remarkably strong," said Rau.

That's a big change from IDC's February projection that processor shipments would decline in 2009. Microprocessor unit shipments will decline by about 15 per cent in 2009 compared to last year, noted Rau 9 months ago.

In today's report, IDC said it remains cautious in projecting processor shipments for 2010.

"While it's clear our concerns about the second half of the year weren't necessary, we're still watching for a 'gotcha', possibly in 1Q '10," said Rau. "The market's growth has been due to shipments of inexpensive Atom processors being sold into markets like China, which is being stimulated by government incentives there. The Chinese market can be very opaque. There are lots of places where inventories can hide. We have to be on the lookout for when China decides it can't consume more processors. Meanwhile, the U.S. market is still hamstrung by housing foreclosures and rising job losses."

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Sharon Gaudin

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