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Global chip sales to drop 4.4% in 2008, worse to come, says Gartner

December 12, 2008 //

For only the fifth time in the last 25 years, the semiconductor industry will post a decline in revenue, with worldwide semiconductor revenue totalling $261.9 billion in 2008, a 4.4 per cent decline from 2007, according to preliminary results from market research organization Gartner


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LONDON For only the fifth time in the last 25 years, the semiconductor industry will post a decline in revenue, with worldwide semiconductor revenue totalling $261.9 billion in 2008, a 4.4 per cent decline from 2007, according to preliminary results from market research organization Gartner Inc. (Stamford, Connecticut).

As recently as November Gartner was predicting that worldwide semiconductor revenue in 2008 would increase by 2 percent to total $279.4 billion (see Nov. 3 story).

"In the last quarter of 2008, market conditions deteriorated significantly, and as the fourth quarter has progressed, many vendors have issued updated guidance for the quarter, reflecting weakening market conditions," said Andrew Norwood, research vice president at Gartner. "Unfortunately for vendors, 2009 is going to be considerably worse. Some have compared the precipitous decline in semiconductor demand to that of the 2001 'dot-com' bubble. However, unlike 2001, this economic downturn is much more broad-based and not limited primarily to the technology sector."

Intel Corp. continues to lead the market and is expected to achieve $34.19 billion in sales, nearly twice as much as second ranked Samsung Electronics Co. Ltd. with $17.90 billion. Samsung is set to suffer a 12.5 percent drop in chip sales partly due to its heavy exposure to memories, which are suffering from oversupply (see ranking table below on next page).

Intel held the No. 1 position for the 17th consecutive year, and it increased its market share to 13.1 percent in 2008. However, Intel's 2007 revenue figure includes the NOR flash memory business that was spun off to Numonyx in the second quarter. With the removal of the NOR flash business Intel managed to grow 1.1 percent but when comparing only continuing operations, Intel's revenue grew 6.5 per cent, beating the market average by nearly 11 percentage points.

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