Gartner raises chip sector forecast

Research firm Gartner has raised its forecast for the chip sector, predicting a 17.1% fall in sales this year to €148 billion after an unexpectedly strong second quarter. Previously it had projected a 22.4% decline.
Gartner research vice president Bryan Lewis said sequential sales had risen 17% in the second quarter, a result of retail price-cutting and the impact of economic stimulus measures worldwide.
“Consumers reacted strongly to reduced PC and LCD TV pricing as price elasticity was amazing,” he said. “The industry also benefited from the China stimulus package that worked remarkably well to boost short-term demand. Governments worldwide took action quickly and extensively to avoid a meltdown, and it worked.”

Some of the biggest chip vendors had reported strong second quarter growth “that bodes well for the PC and cellphone segments,” Gartner said.
Market leader Intel notched up 12% growth and Samsung, the second largest vendor, posted a 30% increase as a result of firming memory prices, exchange rates, and a rebound in PC production.
Qualcomm reported a 35.7% sequential increase in mobile phone chip sales.

However, Gartner said all semiconductor segments were expected to experience double-digital declines in revenue this year.
The largest segment of the market, application-specific standard product (ASSP), would reach €40.1 billion in 2009, down 16.5%, and memory is forecast to fall 13.5% to €28.7 billion.
Gartner’s latest outlook for 2010 is that worldwide revenue will total €163 billion, up 10.3% from 2009 projections.

“The fourth quarter of 2009 and first quarter 2010 will be extremely important in shaping the annual growth for 2010,” Lewis said.
“We are currently expecting the fourth quarter of 2009 to be slightly positive, in line with typical seasonal patterns, but foundries have reported they are concerned that demand may drop off more than seasonal in the fourth quarter, and it may carry into first quarter 2010.”
He said Gartner expected sales to shrink 5% in the first quarter of 2010 “as customers take a pause and absorb all the devices they purchased over the previous three quarters.”