Semiconductor Industry Revenue Forecast Reduced - InformationWeek

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Infrastructure // PC & Servers

Semiconductor Industry Revenue Forecast Reduced

Researchers with Gartner estimate that 2009 revenue growth will now only be 1% higher than this year to $282 billion.

Gartner on Monday dramatically lowered next year's revenue forecast for the semiconductor industry, a reflection of the damage being done by the global economic crisis.

The market researcher estimates that 2009 revenue growth will be 1% higher than this year to $282 billion. In the third quarter, Gartner had forecast a 7.8% increase to $307.7 billion.

While semiconductor companies mostly met expectations for the third quarter of this year, growing about 5% quarter to quarter, guidance for the fourth quarter continues to drop, Gartner said. The researcher expects worldwide revenue this year to total $279.4 billion, a 2% rise from 2007.

"Semiconductor growth was surprisingly strong until recently, given the very weak economic environment, but this will start to change in the fourth quarter of 2008," Gartner analyst Bryan Lewis said in a statement. "Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009."

Gartner lowered its forecast based on the demand it sees for such electronics as PCs and cell phones, which account for about a third of the total semiconductor market. For example, if PC unit sales drop by 8%, that would cause a decline in semiconductor growth by 1.61%.

"In a recession, it's important to remember that there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content," Lewis said.

Gartner is not the only analyst firm to lower its revenue forecast for semiconductors. ISuppli last month dropped its 2008 forecast for global sales to $280.1 billion, a 3.5% increase from last year. ISuppli, which had previously predicted a 4% rise, also blamed the revision on the global economic crisis.

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