The global semiconductor industry is likely to see a decline of 22.4 per cent in revenues at $198 billion in 2009, according to IT research firm Gartner.
The worldwide semiconductor revenue is forecast to reach $198 billion in 2009 against a revenue of $255 billion in 2008, down 22.4 per cent, a Gartner statement said.
However, the outlook is slightly better than the first quarter projections, when Gartner forecast semiconductor revenue to decline 24.1 per cent in 2009.
Gartner stated that the first quarter PC shipments came in better than expected, which led to an improved outlook for microprocessors, even as the improvement may be due to the fact that inventories had been run down too far, rather than return of true demand.
"We are expecting 4.9 per cent growth in second quarter semiconductor sales based on recent semiconductor company guidance, and this positive movement has caused us to move away from our first quarter of 2009 worst-case scenario of a record down year in 2009," Gartner research vice president Bryan Lewis said.
While this is a positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China, Lewis added.
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Inventory burn in the PC market in the fourth quarter of 2008 and in January and February 2009 pushed component demand significantly below PC demand, driving down prices across the board.
Gartner analysts said PC vendors that started cutting inventory early were able to achieve significant savings on bill of materials. As the inventory correction swings in the opposite direction, Gartner expects component prices to stabilize through the year.
Further, application-specific standard product (ASSP) would continue to lead semiconductor revenue, as it is forecast to total $51.9 billion in 2009, a 24.2 per cent decline from 2008.
The memory market would be the number two segment for the semiconductor industry, as it totals $39.4 billion, a 16.8 per cent decline from 2008.