While Intel and Qualcomm showed they could bring in revenue this year, Gartner is predicting that the entire semiconductor industry is due for a major loss of revenue in 2009 thanks to the ongoing financial crisis. If this Gartner prediction holds up, the semiconductor industry is poised to lose revenue in 2008 and 2009 - the first time the industry has witnessed back-to-back revenue losses. The falling price of DRAM is also expected to play havoc with the industry in 2009.
The world's semiconductor industry is poised to lose revenue
in 2008 and 2009 - the first time the industry has ever lost money in
back-to-back years, according to a new report from Gartner.
The Dec. 16 Gartner report found that the world's semiconductor
companies will collect $219.2 billion in revenue in 2009, a decline of more
than 16 percent compared to 2008. Last week, Gartner
published another report that found preliminary semiconductor revenue for 2008
is estimated at $261.9 billion, a 4.4 percent decline from 2007.
The previous Gartner report found that only Intel
and NEC Electronics had managed to collect more revenue in 2008 than in 2007. The
reason for the historic drop in revenue is the ongoing global financial crisis,
which has meant less consumer and business spending on desktops, laptops
smart phones, gadgets, as well as high-end hardware such as server systems.
While the hardware outlook for 2009 is bleak, Gartner found
that the loss of revenue is not as severe as 2001. In that year, semiconductor revenue
fell 32.5 percent from the year before, according to Gartner.
and Advanced Micro Devices have each issued reports
that found their
fourth-quarter sales will be below previous expectations.
market for DRAM (dynamic RAM) could mean that the industry will collect even
less revenue in 2009
than Gartner is predicting right now. The market for
all types of memory products, including DRAM
and NAND flash memory, continues to fall due to oversupply, but the Gartner
report found DRAM industry alone has lost
about $12 billion in the last 18 months.
"The DRAM market is so
bad that suppliers must either significantly scale back supply, or the weaker
players will be forced into mergers or bankruptcy," Andrew Norwood, a Gartner
analyst, wrote in the Dec. 16 report. "Either way, we are expecting DRAM
pricing to firm during the second half of 2009, and this has the potential to
moderate the decline in 2009 semiconductor revenue."
Gartner is revising it semiconductor outlook after the
financial crisis began on Wall Street in September. Originally, Gartner called
for the industry to grow its revenues less than 1 percent in 2008 and revenue
to decline only 2.2 percent in 2009. Now, Gartner analysts believe that revenue
in the fourth quarter of 2008 will fall 24.4 percent.
There is a possibility that semiconductor companies have "overcorrected"
their inventories in response to the financial crisis, which could mean that
the industry might bounce back a little in 2009.
At best, Garter believes that the entire semiconductor will
not grow its revenue until 2010, when analysts are predicting a 14 percent
increase in revenue for a total of $251.2 billion. Revenue in 2011 should reach