Chip Market To Stabilise in 2010, IDC Finds

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Analyst house IDC has said that the semiconductor market, which was hit hard during 2009, is beginning to stabilise

More good news for PC makers after the market research firm IDC said the marked fluctuation in the semiconductor market, which began as the worldwide recession hit the industry in late 2008 and into 2009, will begin to normalise as the year moves on.

In a report 6 July, IDC analysts said the semiconductor market saw revenues drop 9.9 percent in 2009. However, in the fourth quarter of 2009 and first quarter of 2010, the space saw “very exuberant [order] rates.” That is now beginning to stabilise, they said.

Worldwide semiconductor revenue will hit $274 billion (£181 billion) in 2010, IDC said, and $295 billion (£195 billion) in 2011. By 2014, revenue will grow to $344 billion (£228 billion), the analysts said.

Growing Sales

IDC’s report came out the same day that the SIA (Semiconductor Industry Association) announced that semiconductor sales in May grew to $24.7 billion (£16.3 billion), a 4.5 percent increase over April and a 47.6 percent jump from May 2009. SIA officials also said they expect sales of $290.5 billion (£192 billion) for the year.

SIA attributed the growth to a number of factors, including the growing sales of PCs and cell phones, corporate demand for IT, the automotive industry and emerging markets.

IDC analysts said they also saw strong semiconductor revenue growth in the PC space, and expect about a 35 percent year-over-year revenue growth in 2010. They attributed much of that growth to mobile PC applications and an expected rise in enterprise IT spending both in 2010 and into 2011.

Smartphone Demand

The wireless sector of the market should see a record $59.3 billion (£39 billion) in revenues, thanks in large part to the strong demand for smartphones. However, memory pricing will bring revenue growth in 2011 and 2012 back to high single digits, IDC said.

Memory is another area that will see high revenue growth in 2010 – at $66.7 billion (£44.2 billion), more than 52 percent more than in 2009 – as demand for memory in laptops, netbooks, tablets and smartphones increase. However, that sector also will stabilise over the next two years thanks to pricing pressures, more supply and technology transitions, IDC said. Revenues in this area for 2011 and 2012 will be flat or fall slightly, according to IDC.

Revenue growth with be strong for semiconductors used in industrial, military and automotive segments, though it will begin to normalize in the consumer sector of the market, the analysts said.

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