Gartner: Semico market to shrink by 22pc in 2009

Gartner has today announced that worldwide semiconductor revenue is forecast to reach $198 billion in 2009. That's a 22.4 percent decline from 2008 revenue of $255 billion. On the positive side, this outlook is better (just) than the first quarter projections - which had a predicted decline of 24.1 percent.

Not looking good really. Unless you're in solar. This sector has been removed from Gartner's figures because it's growth is skewing the overall picture. So the insider tip, put your money here.

Gartner is expecting 4.9 percent growth in second quarter semiconductor sales based on recent semiconductor company guidance, and this positive movement has caused a move the worst-case scenario of a record down year in 2009.

As Garnter said, "While this is positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China."

From the press release:
Inventory burn in the PC market in the fourth quarter of 2008 and in January and February 2009 pushed component demand significantly below PC demand, driving down prices across the board. Gartner analysts said PC vendors that started cutting inventory early were able to achieve significant savings on bill of materials. As the inventory correction swings in the opposite direction, Gartner expects component prices to stabilize through the year.

Application-specific standard product (ASSP) will continue to lead semiconductor revenue, as it is forecast to total $51.9 billion in 2009, a 24.2 percent decline from 2008. The memory market will be the No. 2 segment for the semiconductor industry, as it totals $39.4 billion, a 16.8 percent decline from 2008. The microcomponents segment (microprocessors, micro controller units, digital signal processors) will drop from the No. 2 spot in 2008 to the No. 3 spot in 2009. Microcomponents are projected to reach $37.3 billion, a 23.6 percent decline from 2008.

Consumer spending will remain somewhat depressed due to high unemployment, low housing pricing, and relatively low consumer confidence. IT budgets are modestly down in 2009, but companies are not spending at the rate of their budgets.