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August 26, 2009

Gartner revises semiconductor revenue forecast for 2009

Expects revenue to decline by 17.1% compared to its previous projection of 22.4%

By CBR Staff Writer

Worldwide semiconductor revenue is expected to decline by 17.1% to $212 billion in 2009, compared to revenue of $255 billion last year, according to market research firm Gartner.

This forecast is better than the second quarter projection, when Gartner projected semiconductor revenue to decline by 22.4% this year.

Bryan Lewis, research vice president at Gartner, said: “The semiconductor market has performed better than expected, as was evident when second quarter semiconductor revenue increased 17% in sequential sales.

“Consumers reacted strongly to reduced PC and LCD TV pricing as price elasticity was amazing. The industry also benefited from the China stimulus package that worked remarkably well to boost short-term demand. Governments worldwide took action quickly and extensively to avoid a meltdown, and it worked.”

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While the outlook for 2009 has improved, Gartner analysts point out that all major segments of the semiconductor market are expected to experience double-digital declines in revenue this year.

Gartner said that the largest segment of the semiconductor market, application-specific standard product (ASSP) will reach $57.2 billion in 2009, a 16.5% decrease from 2008 revenue.

Revenue from memory market is expected to be $41 billion, 13.5% down from last year. The micro components segment (microprocessors, micro controller units, digital signal processors) is on pace to reach $39.4 billion in 2009, a 19.2% decline from 2008.

Looking ahead, Gartner predicts worldwide semiconductor revenue to total $233 billion in 2010, a 10.3% increase from 2009 projections.

Mr Lewis added: “We are currently expecting the fourth quarter of 2009 to be slightly positive, in line with typical seasonal patterns, but 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. Gartner ‘s most likely scenario is calling for a negative 5 percent growth in the first quarter of 2010 as customers take a pause and absorb all the devices they purchased over the previous three quarters.”

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