Chip Market Decline Less Than Expected

The global semiconductor market experienced one of its worst years on record in 2009, but despite the poor sales during the economic recession, the industry's performance could have been much worse, a research firm says.

Worldwide revenue this year will be 12.4% less than last year, plunging more than $32 billion, iSuppli said. Nevertheless, the decrease was much less than the 20% drop predicted in the first quarter, when the market suffered a quarter-to-quarter decline of 18% following a 21.4% drop in the fourth quarter of 2008.

Unexpectedly, semiconductor sales in the second and third quarter rebounded with an increase of more than 18%, respectively. Sales in the fourth quarter will rise by 5% sequentially, according to iSuppli.

"This strong rebound means 2009 will be much less painful than had been feared earlier in the year," Dale Ford, senior VP at iSuppli, said in a statement. The rebound was due to better-than-expected sales in the memory market, as well as in chips for consumer electronics and wireless products.

Among the top 10 suppliers, only Samsung Electronics achieved revenue growth in 2009, with sales rising a scant 1.3%, iSuppli said. The company benefited from its leadership in the memory market.

"Samsung managed to outperform the memory market partly due to its early leadership in new, higher-margin memory products," Ford said.

Noteworthy performance among the top 10 vendors in 2009 included Qualcomm's rise to number six from number eight last year. The company managed to keep overall revenue flat due to sales in the wireless segment and its rising share of the market for baseband chips.

Advanced Micro Devices managed to climb back into the top 10 to number nine due to its ability to limit its revenue decline to 7.6%. Rival Intel, the world's largest chipmaker, managed to hold its sales decline to 5%.

iSuppli is not the only market researcher to see an improvement in the semiconductor market. Gartner this month predicted sales would bounce back next year to same level as 2008, or $255 billion.