Consumer demand for electronics products such as desktops and notebooks, good inventory control by manufacturers and an improving economy could mean record revenues in the semiconductor market, according to iSuppli. That could change, however, should the economy hit another roadblock.
The semiconductor is poised for a record year, as long as the economy
continues to improve, according to analysts at iSuppli.
In a report issued May 6, iSuppli analysts said the
semiconductor industry is poised to generate $300.3 billion in revenue, a 30.6
percent jump from the $229.9 billion during recession-plagued 2009.
The $300.3 billion will be a record for the worldwide chip
industry, besting the previous record of $274 billion set in 2007 by about 9
This would be the second time in 10 years that the industry saw
a more than 30 percent increase in revenue. In 2000, the chip business saw a
36.7 percent increase, according to the market research company.
There's a difference, though, said iSuppli analyst Dale Ford.
While the growth in 2000 was spurred by the Internet rush, the expected 2010
spike is based on more concrete factors that have been coming together for the
"Building on the continuing expansion in sales that
followed the downturn in late 2008 and early 2009, the semiconductor industry
is set to achieve remarkable revenue growth and record size in 2010," Ford
said in a statement.
"Chip sales growth this year will be fueled by a
number of key factors, including continued strong consumer demand for hot
electronic products, diligent inventory and capacity management efforts among
chip makers, and the arrival of innovative technologies at both the component
and end-system levels."
However, he did say the growth in 2010 needs to be viewed in
relation to the poor economic conditions of 2009, when the semiconductor
industry-like most sectors of the global economy-saw business plummet. Compared
with 2008, revenue in 2010 is expected to grow by 15.4 percent.
The first quarter kicked off the year in strong fashion,
according to Ford. Normally first-quarter sales decline from the fourth
quarter, when sales peak thanks to the holidays.
"However, in 2010, first-quarter chip sales expanded by
1.1 percent compared to the fourth quarter of 2009," he said. "This
is the first time the industry has achieved sequential growth in the first
quarter since 2004, and it represents the strongest growth during the period
since 2002, when revenue grew by 5.4 percent."
iSuppli outlined several factors fueling the growth, including
the increasing demand among consumers for electronics, from PCs to mobile
handheld devices to LCD televisions. iSuppli is predicting the demand will
result in record worldwide factory revenue for electronic systems growing 10.4
percent to $1.55 trillion in 2010. The previous high was $1.53 trillion in
Chip makers also did a good job of managing their inventory and
manufacturing, which has led to strong pricing of products.
All that said, much of what happens in 2010 will depend on the
economy, Ford said.
"The economy represents the biggest wild card in iSuppli's
2010 forecast," he said. "While many indicators have shown sustained
improvement, there are, however, a number of financial and economic trouble
spots that could endanger the continued growth in the market before the end of
At the same time iSuppli was giving a hopeful view of 2010,
analysts at IDC were illustrating just how
difficult a year 2009 was.
In a report issued May 4, IDC
said worldwide revenues for the semiconductor industry fell 9 percent in 2009,
to $225.1 billion, thanks to the recession.
The first half of the year was particularly difficult, according
to the market research company. However, a spike in demand in the second half
of the year helped some chip makers' revenue grow during the year.
Some of those vendors included Atheros, Cavium Networks,
MediaTek, NetLogic Microsystems, Synaptics and Richtek Technology. Another
sector that saw some bounce-back was the DRAM
(dynamic RAM) market, which helped Samsung,
Hynix Semiconductor, Elpida Memory, Micron Technology and Nanya Technology
Toshiba, Samsung and Micron also saw NAND demand grow in the
"This is not a surprise, as demand for wireless products, intelligent
networks, embedded processors and touch-based user interfaces increased
tremendously in the second half of 2009," IDC
analyst Mali Venkatesan said in a statement.