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Financial turmoil causes $25bn drop in chip revenue

Gartner predicts tough times for chip makers

Gartner has lowered its preliminary chip industry revenue projections for the next few years, including a $25.5bn reduction for 2009.

Although Gartner's formal report on the chip industry won't be finalised until the end of November, the researcher said it revised down its preliminary 2008 chip industry revenue growth forecast to just 2 percent to $279.4bn, from a previous estimate of 4.2 percent growth.

As job losses mount and business and consumer spending tightens next year, the chip industry will face even tougher pressures. Gartner predicts 2009 semiconductor industry revenue will rise only 1 percent year-on-year to $282.2bn. Previously, Gartner had forecast growth of 7.8 percent to $307.7bn.

In a worst-case scenario, chip industry revenue could decline 10.3 percent next year, Gartner said.

"In a recession, it is important to remember that there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content," said Gartner analyst Bryan Lewis, in the Semiconductor DQ Monday Report.

The chip sector will likely rebound in 2010, posting 10.5 percent growth on revenue of $311.8bn, Gartner said.


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