Gartner: 2009 looking better, but seasonal softness ahead

August 27, 2009 – In another growing sign of optimism that the worst may be over for the semiconductor industry, Gartner analysts have again bumped up their forecast for chip sales this year, tacking on about $23B in sales and removing about five percentage points of negative growth.

The firm now projects chip sales to decline -17.1% this year to about $212B; that’s notably better than the $198B/-22.4% it projected in early summer, and $194B/-24% it forecasted in February, which the firm (and much of the industry) now acknowledges was probably the bottom of the current downturn.

Much of the improvement is seen in application-specific standard product (ASSP) — back in May Gartner forecast this segment to dip more than -24% for 2009, but now sees just a 16.5% dropoff — amounting to an extra $5.3B in sales, roughly a 10% improvement over its prior forecast. Gains are also seen in the memory sector, originally pegged at nearly -17% ($39.4B) but now -13.5% ($41.0B). And microcomponents (including microprocessors, microcontrollers, and digital signal processors), which were forecast to dip -23.6% this year to $37.3B, are now bettered to $39.4%, a -19.2% dip.

“Amazing” elasticity in reduced PC and LCD TV pricing lured consumers to start spending again; also helping in particular was China’s stimulus package which boosted short-term demand, noted Bryan Lewis, research VP at Gartner, in a statement. In general, “governments worldwide took action quickly and extensively to avoid a meltdown, and it worked,” he said.

Gartner had hoped for a solid 2Q (4.9% growth vs. 1Q) and it seems to have materialized, Lewis noted, pointing to sequential growth at Intel (12%), Samsung (30%), and Qualcomm (>35%), which bodes well for PV and cell phone sectors.

But as before, questions remain about how reliable the upswing is. Lewis had before cautioned that PC sales were being inflated by inventory rebuild, and real end-demand still showed little sign of returning in force. Now we’re entering the seasonal period where chipmakers start ramping up for the big year-end holidays, and signs already suggest softness. “Foundries have reported they are concerned that demand may drop off more than seasonal in the fourth quarter, and it may carry into first quarter 2010,” Lewis warns. He says 4Q09 should end up “slightly positive” but that a demand dropoff could spill into early 2010, a season increasingly viewed as critical to set the new year’s tone. He projects a -5% decline in chip sales in 1Q10 “as customers take a pause and absorb all the devices they purchased over the previous three quarters.”

Old forecast (May 28):

  • Application-specific standard product (ASSP): $51.9B, -24.2%
  • Memory: $39.4B, -16.8%
  • Microcomponents (MPUs, MCUs, DSPs): $37.3B, -23.6%
  • TOTAL: $198B (-22.4%)

New forecast (August 26):

  • Application-specific standard product (ASSP): $57.2B, -16.5%
  • Memory: $41.0B, -13.5%
  • Microcomponents (MPUs, MCUs, DSPs): $39.4B, -19.2%
  • TOTAL: $212B (-17.1%)


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