Semiconductor Market Rebounding

Despite two years of decline, the industry saw a much better second half of 2009 than expected, report says.
Global semiconductor revenue fell last year by 10.5%, marking the first time the industry has seen two consecutive years of revenue declines, a market research firm said Monday.

Worldwide revenue for the more than 270 semiconductor vendors tracked by Gartner reached $228.4 billion last year, down $26.8 billion from 2008, the researcher said.

Despite the drop, the industry saw a much better second half of 2009 than expected, Gartner reported. As a result, 2010 is expected to show strong growth in comparison to a weak 2009. Last month, Gartner predicted that semiconductor this year will rise by nearly 20% year-over-year.

"After an unprecedented decline in the fourth quarter of 2008 and the first quarter of 2009, sequential quarterly revenue growth for the industry overall was very strong in the last three quarters of 2009," Gartner analyst Peter Middleton said in a statement. "As a result, 2009 performance overall was much milder than initially feared in the aftermath of the financial crisis."

Intel held the number one slot for the 18th consecutive year and increased its market share to 14.6% in 2009 from 13.6% the previous year. This market share increase came even as the chipmaker saw revenue fall 4.5%, Gartner said. Intel was able to increase share because of the relative strength of the PC market, particularly laptops, which sold well despite the economic recession.

Number two Samsung Electronics was one of the few companies to see a revenue increase last year. Samsung's performance was due in part to rising prices of its main product lines, DRAM and NAND flash, Gartner said. The higher prices were due to vendors in general reducing output following strong declines in 2008, which brought supply in line with demand.

Among the top 10 vendors, Infineon saw the largest decline, with revenue falling 43.1%. The big drop was due to the bankruptcy of its Qimonda memory business and the divestiture of its Wireline Communications unit.

Gartner's final figures for the semiconductor market were better than the preliminary figures the researcher released last December. At the time, the analyst firm said the industry was on track to post an 11.4% drop in revenue.