May 29, 2009 – So far 2009 is still looking pretty lousy, but it’s not as bad as worst-case fears would have thought just a few weeks ago, according to an updated analysis from Gartner — but the firm reiterates things won’t improve much anytime soon.

Back in February the firm lowered its outlook for 2009 semiconductor revenues to about $194B, a -24% decrease from 2008, vs. its December prediction of a -16% annual decline — and warned that a record -33% decline was very much in the cards if moderate declines continued through 2Q and 3Q. Research VP Bryan Lewis even suggested firms accelerate their outsourcing and partnering to mitigate expenses, and even outright trim R&D budgets — generally viewed as a last resort, as innovating in a downturn supports future new product sales when conditions improve.

Now, Gartner is backing off its February doom & gloom and ticking its outlook up a few notches to a -22.4% decline in 2009 sales (to about $198B), saying that PC shipments were better than expected in 1Q09. And an anticipated 4.9% uptick in 2Q09 sales, based on chip suppliers’ recent guidance, “has caused us to move away from our 1Q09 worst-case scenario of a record down year in 2009.”

The good news in PC sales is hollow, though, Lewis points out, because suppliers rebuilt inventories that they’ve hurriedly burned off since 4Q, and because of any real end-demand. “The semiconductor industry is clearly not out of the woods, as there is minimal evidence that demand is returning, except in China,” he writes. “Consumer spending will remain somewhat depressed due to high unemployment, low housing pricing, and relatively low consumer confidence,” he added, and corporate spending is still below budgets which were already “modestly down” vs. a year ago.

Gartner’s revised 2009 semiconductor sales forecast, by product segment:

• Application-specific standard product (ASSP): $51.9B, -24.2%
• Memory: $39.4B, -16.8%
• Microcomponents (MPUs, MCUs, DSPs): $37.3B, -23.6%