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PC market slump hits semiconductor sales

Intel retains lead in chip market

Global semiconductor revenue is expected to fall this year as demand for PCs and consumer electronics slows down, with the trend continuing to affect chip makers next year, analyst firm iSuppli said on Monday.

Consumer confidence has faded because of the global financial crisis, which has led to restrained spending on products like consumer electronics and PCs, said Dale Ford, senior vice president at iSuppli. Slowing orders for semiconductors used in those products have in turn impacted chip makers.

There is no driving force that could immediately lift the semiconductor market out of its slump and the trend could continue next year, Ford said.

"We are expecting a continued contraction in 2009," Ford said, adding that conditions for the semiconductor market could improve by the end of 2009 as economies stabilise.

Semiconductor revenue worldwide is expected to be $266bn for 2008, a 2 percent drop from 2007, iSuppli said in a study released on Monday. The numbers includes revenue from chips like microprocessors, memory, optical chips and other components.

See all Intel news

An overall positive picture for semiconductor revenue in 2008 is being darkened by a steep drop in memory revenue, according to Ford. Memory chips are flooding the market, driving down prices and revenues for their makers. Samsung, Toshiba and Micron Technology are all expected to report semiconductor revenue drops for 2008, iSuppli said.

Memory chips will account for 17.9 percent of the world's semiconductor revenue for 2008, a 16.9 percent decline compared to 2007, iSuppli said. Revenue from different memory types, from DRAM used in PCs to NAND flash used in consumer electronics like MP3 players, are expected to decline in 2008 compared to the previous year.

However, iSuppli said certain semiconductor sectors will report revenue growth this year. The optical component market is expected to report 6.2 percent revenue growth for 2008, with companies like Sharp Electronics and Panasonic benefitting.

Intel placed first in global semiconductor revenue in iSuppli's study, with $34.14bn in revenue for 2008, only 0.4 percent in growth compared to 2007. Samsung was second, with revenue of $17.89bn, a 9.1 percent decline compared to 2007. Texas Instruments was third, with $11.5bn in semiconductor revenue, a 6.3 percent decline, followed by Toshiba, with a revenue fall of 5.9 percent to $11.46bn in 2008.


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