Gartner sees recession slicing through chips

Analyst firm Gartner has claimed the economic crisis will knock the semiconductor industry almost into recession next year.

Worldwide semiconductor revenue growth in 2009 is expected to be 1 per cent, down by approximately 7 per cent from previous estimates. In the third quarter of 2008, worldwide semiconductor revenue for 2009 was forecast to be $307.7bn, a 7.8 per cent increase from 2008’s revenue estimate. Gartner analysts now expect worldwide semiconductor revenue in 2009 to total approximately $282bn, a 1 per cent increase from 2008 revenue.

Although semiconductor companies mostly met expectations for the third quarter of 2008, guidance for the fourth quarter of 2008 continues to drop. Gartner estimates worldwide semiconductor revenue in 2008 to total $279.4bn, a 2 per cent increase from 2007.
“Semiconductor growth was surprisingly strong until recently, given the very weak economic environment, but this will start to change in the fourth quarter of 2008,” said Bryan Lewis, research vice president at Gartner. “Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009.”
Gartner’s calculations are based on assumptions of spending cuts. PCs and cell phones account for approximately a third of the total semiconductor market, so they are the biggest applications for adjusting growth. For example, if the system unit percentage change of PCs is lowered by 8 per cent, this would impact semiconductor growth by 1.61 per cent.
“In a recession, it's important to remember that there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content,” Lewis said.

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