Gartner Increases 2010 Semiconductor Revenue Projections

Market research company Gartner is upping its revenue projections for the semiconductor industry based on strong demand for PCs, mobile phones and other consumer devices.

In a report June 3, Gartner analysts said worldwide semiconductor revenue for 2010 should reach $290 billion, approximately a 27.1 percent increase over 2009, when revenues hit $228 billion.

In January, Gartner forecasted a 19.9 percent jump in 2010 revenues.

The analysts have seen strong growth over the past five quarters, which may lead to a slowing in the second half of the year, according to Gartner analyst Bryan Lewis. However, that shouldn't derail what will turn out to be a very strong year, Lewis said.

"Chip revenue growth is clearly outpacing system revenue growth and that is a concern," Lewis said in a statement. "Gartner's new semiconductor forecast has below-average growth in the second half of 2010 as we are anticipating a minor correction to realign semiconductor sales with electronic system sales. Even with this minor correction, we are still expecting very strong growth and record semiconductor sales in 2010."

Gartner is expecting that growth to continue beyond 2010 and is predicting $307 billion in revenue for 2011.

For this year, the PC and mobile phone markets will make up 40 percent of the market's growth, the analysts said. PC processor revenue should grow 15.5 percent, with the average selling prices for PC processors beginning to stabilize.

The DRAM (dynamic RAM) market should see prices continue to rise, leading to a predicted 78 percent jump in revenue and making the DRAM space the strongest of the semiconductor device markets.

That will only grow over the next few years, analysts said, as the demand for such devices and media tablets increases. That demand has been illustrated by the success of Apple's iPad—which has sold more than 2 million units in the first two months since its release—and the expectation of such devices from other vendors, including Hewlett-Packard and Dell. 

However, the real impact of the tablet business won't be felt strongly in the PC and smartphone markets until 2013.

Gartner's projections come two days after a Semiconductor Industry Association report said semiconductor sales for April were $23.6 billion, a jump from 2.2 percent from March and a 50.4 percent increase over April 2009, when the recession was in full swing.

"Important contributors to current growth of semiconductor sales include the worldwide adoption of 3G wireless communications and consequent investment in infrastructure and recovery of demand from the enterprise, automotive and industrial sectors," SIA President George Scalise said in a statement. "Going forward, we expect semiconductor sales will return to historical seasonal patterns. Future growth of the industry remains heavily dependent on the continued global economic recovery and, in particular, on continued growth in the developing markets that are the largest demand drivers for our products."