Gartner Predicts Record Chip Sales

This year will hit $235 billion, the highest since the previous record-setter year 2000, when revenues reached $223 billion. The market research company said Friday (Dec. 9) worldwide semiconductor revenue is expected to reach $235 billion this year, a 6.9 percent increase from 2004, and the first time the sector has surpassed the previous record-setting year since 2000, when revenues reached $223 billion.



LONDON — The semiconductor industry is back on the annual growth path according to preliminary results for 2005 revenues from Gartner Inc.

The market research company said Friday (Dec. 9) worldwide semiconductor revenue is expected to reach $235 billion this year, a 6.9 percent increase from 2004, and the first time the sector has surpassed the previous record-setting year since 2000, when revenues reached $223 billion.

"Strong growth in the NAND flash market was a recurring theme in the 2005 market share rankings," said Andrew Norwood, research vice president at Gartner. "The continuing strong demand for flash card and USB flash drives in 2005, along with the successful launch of the iPod shuffle by Apple at the start of 2005 and the release later in the year of the iPod nano, will drive this device market to the highest revenue performance in 2005."

Intel remained the No. 1 vendor in 2005, with its revenue up 14.3 percent to $35,136 million, twice the market average. In the previous three years, Intel's growth rate had been below the market average. (See table below for top-10 semiconductor rankings for 2005)

Samsung Electronics is expected to show a 9.7 percent growth rate, with sales of $17,850 million and a 7.4 percent share of the total market, with Texas Instruments taking third slot with sales of $10,450 million and an 8 percent increase.

Fourth and fifth places are occupied by Toshiba and ST Microelectronics, respectively, the former showing a 9 percent improvement and revenues of $9,306 million with ST growing by just 0.7 percent to reach sales of $8,825 million.

Gartner notes that Samsung now dominates most areas of the memory market, holding the No. 1 position in DRAM, SRAM and the fast-growing NAND flash market.

However the star performer during 2005 is Hynix Semiconductor, which will book a 23.4 percent increase in revenues, to $5,736 million, moving in to the top 10 list for the first time.

In the NAND flash segment, Hynix's revenue is likely to reach $1.5 billion, up from $212 million in 2004, an increase of more than 600 percent. "This success is made more satisfying for Hynix given the financial struggles the company has endured over the last few years,” said Norwood.

But Philips Semiconductor, which held the No. 9 position in 2004, has slipped out of the top ten, for only the fifth time in the past 25 years. The last time the company did not make the top 10 was in 2000 when it also came in at 11th slot.

Norwood adds there is hope for Philips and Freescale Semiconductor, the other vendor to be pushed out of the top 10, to re-enter next year. Two existing companies in the top 10, Infineon Technologies and Advanced Micro Devices (including Spansion), plan an IPO of their memory operations in the next 12 months. In both cases, this would result in smaller vendors placed outside the top 10, allowing Freescale and Philips to re-enter by default.

The three companies that are expected to show lower revenues for 2005 than last year are Renesas Technology, down 2.2 percent to $8,801 million, Infineon Technologies, down 7.5 percent to $8,277 million, and the worst performer, NEC Electronics, which could fall by 10 percent to $5,793 million.

Gartner says NEC Electronics suffered from intense competition in mobile phone and data processing markets, as well as a more fundamental lack of strategic direction. Infineon's poor performance was due to falling revenue in the communications market because of a decline in demand for its products from struggling BenQ Mobile, which acquired Siemens' mobile phone arm during 2005.

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