Gartner Inc has revised its revenue decline estimate for 2009, this morning shifting from its February projection of a 24.1% drop to a 22.4% decrease compared to 2008 for the year.

The 22.4% decrease in year-over-year revenue expects worldwide semiconductor revenue to reach $198 billion in 2009. The revision, while representing less than a 2% change, is significant as Gartner had warned in its February projections that its worst-case scenario estimate forecasted a possible 33% sales decline in 2009.

"First quarter PC shipments came in better than expected, which led to an improved outlook for microprocessors, but we believe most of this improvement was due to the fact that inventories had been run down too far, rather than true demand returning," said Bryan Lewis, research VP at Gartner, in a statement today.

"We are expecting 4.9% growth in second quarter semiconductor sales based on recent semiconductor company guidance, and this positive movement has caused us to move away from our Q1 2009 worst-case scenario of a record down year in 2009. While this is positive news, the semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China," Lewis said.                                                                                                
Gartner further reported today that inventory burn in the PC market in Q4 2008 and in January and February 2009 pushed component demand significantly below PC demand, driving down prices across the board. Gartner analysts believe that PC vendors that started cutting inventory early were able to achieve significant savings on bill of materials and said that as the inventory correction swings in the opposite direction, Gartner expects component prices to stabilize through the year.

According to the market research company, ASSPs (application-specific standard products) will continue to lead semiconductor revenue at a forecasted total of $51.9 billion in 2009, a 24.2% decline from 2008. The memory market will follow that at an estimated 2009 sales total of $39.4 billion, a 16.8% decline from 2008. The microcomponents segment will take third place with 2009 revenue projected to reach $37.3 billion, a 23.6% year-over-year decline.

"Consumer spending will remain somewhat depressed due to high unemployment, low housing pricing, and relatively low consumer confidence," Lewis said. "IT budgets are modestly down in 2009, but companies are not spending at the rate of their budgets."

Gartner noted that it has removed solar revenue from its semiconductor forecast because solar cells are not traditional semiconductor devices. The company said that their high growth rates were distorting the true growth of the semiconductor industry and that it is expanding its coverage in solar to provide separate forecast reports on the market.

By: DocMemory
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