Semiconductor Market to Normalize, IDC Says

The semiconductor market, which saw a steep drop in revenues for most of 2009 and then a sharp upswing in late 2009 and early 2010, is beginning to stabilize, according to IDC.

The marked fluctuation in the semiconductor market that started as the worldwide recession hit the industry in late 2008 and into 2009 will begin to normalize as the year moves on, according to market research firm IDC.

In a report July 6, IDC analysts said the semiconductor market saw revenues drop 9.9 percent in 2009. However, in the fourth quarter of 2009 and first quarter of 2010, the space saw "very exuberant [order] rates." That is now beginning to stabilize, they said.

Worldwide semiconductor revenue will hit $274 billion in 2010, IDC said, and $295 billion in 2011. By 2014, revenue will grow to $344 billion, the analysts said.

IDC's report came out the same day that the SIA (Semiconductor Industry Association) announced that semiconductor sales in May grew to $24.7 billion, a 4.5 percent increase over April and a 47.6 percent jump from May 2009. SIA officials also said they expect sales of $290.5 billion for the year.

SIA attributed the growth to a number of factors, including the growing sales of PCs and cell phones, corporate demand for IT, the automotive industry and emerging markets.

IDC analysts said they also saw strong semiconductor revenue growth in the PC space, and expect about a 35 percent year-over-year revenue growth in 2010. They attributed much of that growth to mobile PC applications and an expected rise in enterprise IT spending both in 2010 and into 2011.

The wireless sector of the market should see a record $59.3 billion in revenues, thanks in large part to the strong demand for smartphones. However, memory pricing will bring revenue growth in 2011 and 2012 back to high single digits, IDC said.

Memory is another area that will see high revenue growth in 2010-at $66.7 billion, more than 52 percent more than in 2009-as demand for memory in laptops, netbooks, tablets and smartphones increases. However, that sector also will stabilize over the next two years thanks to pricing pressures, more supply and technology transitions, IDC said. Revenues in this area for 2011 and 2012 will be flat or fall slightly, according to IDC.

Revenue growth with be strong for semiconductors used in industrial, military and automotive segments, though it will begin to normalize in the consumer sector of the market, the analysts said.