Chip revenue falls 11.4 percent in 2009

Worldwide semiconductor revenue dropped by $29bn compared with 2008, according to Gartner, the first time the industry has seen two declines in a row

The semiconductor industry is set to post a revenue drop of $29bn (£17.8bn) for this year, according to research firm Gartner.

Worldwide revenues for 2009 totalled $226bn, down 11.4 percent from 2008, the company said in a research report published on Thursday. It marks only the sixth time in 25 years that the semiconductor industry has posted an annual decline, and is the first time it has seen a drop for two years in a row, according to Gartner.

While revenues fell sharply at the beginning of 2009, carrying on a fall prompted by the economic recession the year before, they began to rise again in the spring, according to the report.

"Revenue dropped precipitously in the first quarter of 2009, continuing a deterioration which started in the last quarter of 2008," said Stephan Ohr, semiconductor research director at Gartner, in a statement. "A small up-tick, noted toward the end of the first quarter, led to significant quarter-over-quarter growth in the periods that followed."

The PC segment was the first to begin to recover, followed by other consumer segments such as mobile phones and automobiles, he said.

"Corporate spending was most deeply impacted by the recession and remains slow to recover," Ohr said.

Out of the top 10 chipmakers, only three posted revenue growth for 2009, with two of those — Samsung and Hynix — being memory makers. The memory segment had already seen revenues drop in 2007 and 2008, and was due for a recovery, Gartner said.

"Memory vendors had slashed capital spending in the previous years, and supply constraints effectively elevated pricing," the company said in the statement.

Qualcomm also grew by 0.4 percent year-on-year — to $6.3bn in revenues for 2009 — by expanding its market share in cellular baseband chips.

Intel's revenues dropped from $33.8bn in 2008 to $31.9bn in 2009, but the company retained the top spot among chipmakers for the 18th consecutive year, with a market share of 14.2 percent, according to the report.

Samsung saw year-over-year growth of 2.5 percent to $17.8bn and was the second-largest chipmaker with 7.9 percent of the market. Toshiba's revenues declined by eight percent to $9.7bn, and the company took the number-three spot with 4.3 percent of the market.

In November, Gartner said it expects worldwide semiconductor revenue to be restored to 2008 levels next year thanks to a strengthening PC market.