Semiconductor industry to grow by 10.3% in 2010

Global research firm Gartner today raised it outlook of semiconductor industry by predicting that revenues will fall by 17% in 2009 compared to 2008, which is better than their earlier estimate of minus 22%. Gartner's research Vice-President Bryan Lewis said in a statement that "The semiconductor market has performed better than expected as was evident when second quarter semiconductor revenue increased 17 per cent in sequential sales". He attributed this to stimulus package in China and strong consumer demand as a result of reduced price of PC and LCD TV.

According to Gartner all major segments of semiconductor market are expected to decline in 2009. The largest segment of the semiconductor market, ASSP(Appliction-Specific Standard Product) will reach $57.2 billion in 2009, but this is a 16.5 per cent decline from 2008 revenue. The memory market, the second largest segment is forecast to touch $41 billion, a 13.5 per cent decline from last year. The microcomponents segments is on place to reach $39.4 billion in 2009, a 19.2 per cent decline from 2008.

In its outlook for 2010, Gartner said the worldwide semiconductor revenue was expected to total $233 billion, a 10.3 per cent increase from 2009 projections. Gartner expects the fourth quarter of 2009 to be positive but foundries have reported they are concerned that demand may drop of more than seasonal in the fourth quarter and it may carry into first quarter of 2010. Gartner's most likely scenario was a negative five per cent growth in the first quarter of 2010 as customers take a pause and absorb all the devices they purchased over the previous three quarters.

Chip sales up in July

Global chip sales in July are believed to have increased by a seasonally adjusted 6 percent over the previous month, according to analyst Bruce Diesen at Carnegie Group (Oslo, Norway). He is expecting that the three-month moving average of global chip sales to be $17.5 billion, compared to $17.2 billion achieved in june. However, compared to June 2008, chip sales are down 21% this year.




Diesen suggests that handset chips, which were weak in June, probably improved more than PC chips. Chinese handset sales improved in July. Memory chips were aided by the trend of more memory per handset including 16GB NAND memory in the third quarter of this year. He also said automotive chips should improve because different governmental initiatives.

ASIC design outsourcing slowed down in 2008 : Gartner

According to the report prepared by Gartner analyst Ganesh Gurumurthy, the survey conducted over 40 vendors offering chip design services has revealed that outsourced design projects saw only a marginal increase of 6.5% in 2008 compared to 34% growth in 2007. According to the the report, growth in full-chip and partial design and back-end physical design outsourcing slowed to about 20 percent, 24 percent and 3 percent, down from 27 percent, 38 percent and 52 percent, respectively, in 2007.

Earlier report prepared by gartner in March said that the number of new ASIC projects will drop 22% in 2009 compared to 2008. Lack of visibility, deteriorating business conditions made chip vendors to cut back or postpone new chip designs in third and fourth quarter of 2008. This took toll on chip design service providers and semiconductor IP vendors as they faced delays and cancellations of projects.

Gartner further advised that with a recovery in chip design activity expected starting in the Q4 2009, design service providers should prepare now to invest, especially in engineering resources, to meet a likely surge in demand for design services and support activity.