Semicon forecast is small consolation

AUTHOR: Inavate

Research body, iSuppli says the battered semiconductor market has dodged dire predictions and should look on the bright side of an abominable year, which saw revenues plunge 12.4 per cent. Estimates at the beginning of 2009, that suggested a revenue drop of more than 20 per cent, were proved wrong but are little solace to a market that has so far lost $32 billion on 2008 figures.

Dale Ford, senior vice president at iSuppli described 2009 as “one of the most dismal years in the history of the global semiconductor market” but said the 12.4 per cent decline now expected was far better than predictions made earlier in the year.

“There was little room for anything but pessimism after the industry suffered a sequential revenue decline of 21.4 percent in the fourth quarter of 2008 and an 18 percent drop in the first quarter of 2009,” he continued. “However, semiconductor sales rebounded smartly after that, with sequential increases of more than 18 percent in the second and third quarters and an expected five percent rise in the fourth quarter. This strong rebound means 2009 will be much less painful than had been feared earlier in the year.”

The better-than-expected results in 2009 are attributable to a surprisingly strong performance in the memory market as well as in sales of chips for consumer electronics and wireless products.

Semiconductor suppliers have been broadly impacted by the downturn, with only 27 of the 135 leading semiconductor suppliers tracked by iSuppli expected to achieve revenue growth for the year.

Among the Top-10 suppliers, only one company is expected to achieve growth in semiconductor revenue in 2009: Samsung Electronics of South Korea. Although the company is set to expand its revenue by a mere 1.3 per cent, it nevertheless represents a standout performance during such a poor year.

“Samsung is benefiting from its dominance in the memory market, whose performance was dramatically better than the semiconductor industry as a whole,” Ford said. “The company is the number one supplier of both DRAM and NAND flash, the two largest segments of the memory market. Samsung managed to outperform the memory market partly due to its early leadership in new, higher-margin memory products, such as Double Data Rate 3 (DDR3) SDRAM.”

The company maintained its number two position in the global semiconductor market behind microprocessor giant Intel Corp. of the United States.

The Asia/Pacific region is set to post the strongest performance both as a supplier as well as a consumer of semiconductors. Semiconductor companies with headquarters in Asia actually are expected to see their combined revenue grow by 0.3 percent. Total shipments of semiconductors to the Asia/Pacific region are forecasted to decline by only 6.8 percent.

On the other hand, Europe was the hardest hit region in 2009. Shipments of semiconductors to Europe are estimated to fall by 20.8 percent and companies headquartered in the European region are expected to suffer a combined drop of 24.2 percent.