Nov. 6, 2008 – While many in the industry expect the economic crisis will have a significant but yet-to-be determined impact on the semiconductor industry (mostly likely as influenced by consumer-gadget purchases this holiday season), Gartner analyst Bryan Lewis already has pegged a specific number: $25.7B, the dollars removed from Gartner’s recalculated 2009 chip industry estimates.
Instead of its previous outlook of $285.4B/4.2% growth, Gartner now sees 2008 chip sales totaling $279.4B/2% annual growth, with a worst/best case scenario of 1.1%/2.6%. And its 2009 outlook has been lowered to only about 1% growth ($282B) instead of the previously expected 7% increase to $307.7B, with a worst/best case scenario of -10.3%/5.0%.
“Semiconductor growth was surprisingly strong until recently, given the very weak economic environment, but this will start to change in the fourth quarter of 2008,” said Lewis, research VP at Gartner, in a report. “Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009.”
Potential impact of the financial crisis on worldwide semiconductor revenues (US $B). (Source: Gartner)
Chip sales actually mostly met expectations in 3Q08, he noted (~5% growth vs. 2Q), but the 4Q outlook continues to sink. “Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009,” Lewis notes. Of particular concern is the sensitivity of changing demand in key application markets (notably PCs and cell phones, which account for a third of the total semiconductor market) — not only should we expect unit shipments to decline, but also a shift back to lower-cost systems with less semiconductor content. If, for example, if PC units drop by 8%, that would impact semiconductor content growth by 1.61%.
Calculating the likely impact of the current economic crisis, Gartner has rewritten its forecast for the next several years, with the brunt felt in 2009 (1% annual growth vs. 7%). The outlooks actually look better for 2010 (10.5% vs. 6.9% pre-crisis) and 2011 (8% vs. 1%) in anticipation of a strong post-crisis rebound, with the next supply-driven downturn pushed out into 2012 (2%, vs. 6.1% pre-crisis).