Semiconductor revenue down 4.4 percent this year

"In the last quarter of 2008, market conditions deteriorated significantly, and as the fourth quarter has progressed, many vendors have issued updated guidance for the quarter, reflecting weakening market conditions," said Andrew Norwood, research vice president at Gartner. "Unfortunately for vendors, 2009 is going to be considerably worse. Some have compared the precipitous decline in semiconductor demand to that of the 2001 'dot-com' bubble. However, unlike 2001, this economic downturn is much more broad-based and not limited primarily to the technology sector."

"Given this increased uncertainty, all semiconductor companies should be focused on cash preservation and inventory management," Norwood said. "While gross margin for IDMs will show significant declines owing to underutilized factories, focusing on inventory now should help the recovery when demand returns. This is also an excellent opportunity for the larger companies with stronger balance sheets to make strategic acquisitions."

Intel held the top-one position for the 17th consecutive year, and it increased its market share to 13.1% in 2008. However, Gartner's 2007 revenues include Intel's NOR flash memory business that was spun off in the second quarter. Comparing only continuing operations, Intel's revenues grew 6.5%, beating the market average by nearly 11 percentage points.