Gartner said it now expects overall 2008 semiconductor revenue to be $285 billion, an increase of 4.2 percent over 2007. The firm had most recently projected chip revenue to be 4.6 percent for the year, reaching $287 billion.

Gartner lowered its 2009 revenue projection to $308 billion, up 7.8 percent from 2008. The firm's earlier projection called for 2009 revenue to increase 7.9 percent to $309 billion.

While global macroeconomic conditions have worsened through the first half of 2008, IT markets have been stronger than Gartner initially thought, according to Bryan Lewis, vice president and chief analyst for ASICs, SoCs, and FPGAs. Gartner recently raised its PC and cell phone unit growth rates to 12.5 percent and 10 percent, respectively, for the year, Lewis said.

"The whole semiconductor market has held up amazing well, but it's starting to show signs that it's going to crack," Lewis said.

Lewis cited recent reports that third quarter revenue from foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) could be 5 percent or lower, significantly less than anticipated, as one of the first signs that the chip market is not immune to larger trends. Original design manufactures (ODMs) are also reporting poor visibility for the third and fourth quarters, which is very different from past years, he said.

The chip market "will get hit, and we are starting to see the first signs of it," Lewis said. Gartner's revised forecast calls for a weak second half 2008 and first half 2009, then a market recovery in the second half of last year.

While the market remains strong for many semiconductor categories, the NAND flash memory market has "fallen apart" over the past two months, Lewis said.

By: DocMemory
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