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Gartner: Semiconductor Industry Still Suffering

Gartner revised its "worst-case scenario" forecast for the semiconductor industry due to an upswing in PC shipments, according to an announcement issued by the analyst firm on Thursday.

Still, the outlook for semiconductor sales remains dim, despite better-than-expected shipment results in the first quarter, according to Gartner. The only bright spot is China, where demand for semiconductors has been returning.

Gartner is projecting that first-quarter semiconductor revenues will hit a cap of $198 billion for 2009, down from $255 billion reported last year. The company had previously forecast a "worst-case scenario of a record down year" for 2009.

Better-than-expected PC shipments for the first quarter suggested "an improved outlook for microprocessors," according to Bryan Lewis, Gartner's research vice president. However, those results were due, in part, to manufacturers letting their inventories run down in the fourth quarter of 2008.

PC manufacturers purchased fewer components, but they also benefitted from lower semiconductor prices, Lewis added.

Gartner is predicting a 4.9 percent growth rate in the semiconductor market in the second quarter of 2009. Application-specific standard product will lead semiconductor revenue with nearly $52 billion in projected sales. Memory components will add $39.4 billion, and micro-components will bring $37.3 billion to semiconductor revenues for the year, according to Gartner. The three segments were all down by an average of 21.5 percent from 2008.

The driving factor in the continued downturn is consumer spending, according to Lewis, who said that high unemployment, a depressed housing market and consumer confidence will play a role in semiconductor revenues this year.

Gartner plans to provide a briefing on the semiconductor market on June 11 in San Jose, Calif., which will address strategies to improve the financial viability of the sector.

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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