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It's only the sixth time in the last 25 years that industry revenue has declined, according to Gartner.

Antone Gonsalves

December 17, 2009

2 Min Read

The semiconductor industry is on track to post a revenue decline for only the sixth time in the last 25 years, a market research firm said Thursday.

Worldwide sales for 2009 will total $226 billion in 2009, an 11.4% drop from last year, making 2009 one of the worst years for the industry since the burst of the dot-com bubble in 2001, according to preliminary estimates from Gartner. In addition, 2009 is the first year the industry has posted declines two years in a row. Revenues in 2008 fell 4.4% from 2007, as a result of the economic recession that started in the fourth quarter of 2008. Vendors did not feel the impact of the economic recession, or the current recovery, equally, Gartner said. Companies selling to PC makers were the first to see improvements in sales in 2009, followed by mobile phones. IT spending by businesses was the most deeply impacted by the recession and remains slow to recover. Only three of the top 10 semiconductor vendors saw revenue growth this year. Two of them, Samsung and Hynix, are memory manufacturers. The companies benefited from higher memory prices. Qualcomm was the third vendor to see growth, capturing market share among cellular baseband processors, the researcher said. Of those top 10 companies showing revenue declines, four experienced double-digit declines. Those companies were STMicroelectronics, Renesas Technology, Advanced Micro Devices and Infineon Technologies, Gartner said. Intel held the No. 1 position for the 18th consecutive year, but saw revenue fall 5.4%. The memory segment, which saw revenue declines in 2007 and 2008, performed better in 2009 than other segments. That's because vendors had slashed capital spending in the previous years, resulting in supply constraints that effectively raised prices, Gartner said.

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