Semiconductor revenue declined less than expected

Although the global semiconductor industry has little to cheer about in 2009, with revenue dropping by 12.4 percent and only one of the Top-10 suppliers achieving growth for the year, there is one source of solace for the battered chip makers: it could have been much worse.

"The year 2009 will be remembered as one of the most dismal years in the history of the global semiconductor business, with a plunge of more than $32 billion in revenue compared to 2008,” said Dale Ford, senior vice president at iSuppli Corp. “However, iSuppli’s preliminary estimate of a 12.4 percent decline is far better than expectations from early 2009 of a more than 20 percent plunge.

“There was little room for anything but pessimism after the industry suffered a sequential revenue decline of 21.4 percent in the fourth quarter of 2008 and an 18 percent drop in the first quarter of 2009. However, semiconductor sales rebounded smartly after that, with sequential increases of more than 18 percent in the second and third quarters and an expected 5 percent rise in the fourth quarter. This strong rebound means 2009 will be much less painful than had been feared earlier in the year.”

The better-than-expected results in 2009 are attributable to a surprisingly strong performance in the memory market as well as in sales of chips for consumer electronics and wireless products.