Semiconductor market to slow down next year

Gartner and IDC say semiconductor growth rates in 2011 will pale in comparison to growth rates this year

Market research firms Gartner and IDC on Thursday said that worldwide semiconductor revenue will slow down next year, putting the brakes on the market's recovery this year from the recession.

Gartner is estimating worldwide semiconductor revenue to reach US$314 billion in 2011, growing by 4.6 percent, which pales in comparison to Gartner growth-rate projections for this year. Gartner this week said it expects worldwide semiconductor revenue this year to reach a "landmark" US$300.3 billion in 2010, up 31.5 percent from 2009, according to a preliminary study.

IDC is projecting a revenue growth rate of 9 percent year over year for 2011, though the company did not provide revenue projections. Semiconductor revenue could be hurt by high unemployment in the U.S. and "the ongoing Euro crisis," IDC said in a statement.

Next year's growth will be a "modest chip correction" of the market after the economic rebound in 2010, said Bryan Lewis, research vice president at Gartner, in a statement. The semiconductor revenue grew at a fast pace this year after revenue had declined by 10 percent in 2009, during the global recession.

Semiconductor revenue next year will be driven by growth in segments including NAND memory, which is used for storage in consumer electronics such as smartphones and tablets. NAND revenue growth is expected to grow by 24 percent next year, driven by the fast growth in shipments of mobile devices.

Semiconductor revenue from mobile phones in 2011 is expected to be $55.4 billion, growing year over year by 13.6 percent, Gartner said.

Revenue from DRAM is expected to decline by 2.4 percent next year, after seeing a resurgence in 2010 with growth of 49.8 percent, Gartner said. The prices of DRAM will fall, and revenue next year will be further hurt with the slowdown in PC purchases that started in the third quarter this year.

However, revenue for other PC semiconductor components such as CPUs will increase on higher average selling prices, Gartner said.

IDC said the PC segment will benefit from the launch of Intel's Sandy Bridge and Advanced Micro Devices' Fusion processors next year. That could help "accelerate the PC replacement cycle and drive semiconductor demand into 2012," IDC said.

Gartner said that overall semiconductor revenue from PCs next year is expected to be $62 billion, declining by 3.2 percent.

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