Global semiconductor revenue to hit US$314B in 2011

Analyst firm Gartner predicts that semiconductor sales worldwide will cross a landmark US$300 billion in 2011, of which chips for media tablets will jump from US$2.4 billion to US$17.8 billion in four years.

The semiconductor industry is poised for sustained but slower growth in 2011 as worldwide revenue for the market is expected to reach US$314 billion in 2011, up 4.6 percent from US$300.3 billion in 2010, according to a study by Gartner.

In a report released Thursday, Gartner revealed that its latest semiconductor revenue estimate comes just a day after its previous statement that semiconductor earnings will surpass a landmark US$300 billion.

The analyst firm also stated that smartphones, mobile PCs and tablets will spur semiconductor growth through 2014.

Media tablets, in particular, are seeing rapid growth due to the success of the Apple iPad, it said. As market competition intensifies, Gartner estimates that semiconductor revenue from tablets will jump from US$2.4 billion in 2010 to US$17.8 billion in 2014.

Semiconductor income from mobile phones will also have continued growth in 2011, Gartner pointed out. Revenue had increased 23.2 percent from 2009 to US$48.7 billion in 2010. In 2011, revenue will move up 13.6 percent to reach US$55.4 billion.

On the flip side, Gartner noted that consumer PC purchases have been below expectations, while enterprise PC replacement cycles have weakened. It found that while semiconductor revenue from PCs increased 34.8 percent from 2009 to reach US$64 billion in 2010, the amount will drop 3.2 percent in 2011 to US$62 billion. Gartner attributed the decline to reduced DRAM (dynamic random access memory) prices.

However, it said other semiconductor PC components such as CPUs will still increase in revenue.

Ironically, Gartner discovered that the memory market, which had the strongest growth at 49.8 percent in 2010, will be the only semiconductor segment to have less revenue, slipping 2.4 percent in 2011.

Gartner elaborated that DRAM will fall 15.6 percent in 2011 as a result of prices and weak PC demand. Nonetheless, NAND memory will increase 24 percent because it is the main storage medium designed into many consumer products, Gartner said in the statement.

Despite the positive outlook for semiconductor sales in 2011, Gartner said the "modest chip correction" in the market that began in the third quarter of 2010 will likely spread to the first two quarters of 2011.

"Third-quarter sequential semiconductor revenue growth was below the seasonal norm, and fourth-quarter growth will also fall short and likely become negative for the first time in six quarters", said Bryan Lewis, research vice president at Gartner.

The third quarter of 2010 was the turning point, noted Lewis. "Semiconductor manufacturing factory utilization rates peaked midyear, and subsequently started to reduce chip lead times and average selling prices", he said.