Gartner Says Semiconductor Industry Grew 11% with Worldwide Revenue Reaching $261 Billion in 2006

Elpida Memory Experienced Strongest Growth Among Top-Tier Vendors, as well as Top Position in the Gartner Relative Industry Performance Ranking

STAMFORD, Conn., December 7, 2006 — Worldwide semiconductor revenue totaled $261.4 billion in 2006, an 11.3% increase from 2005, according to preliminary results from Gartner, Inc.

"Strong growth in DRAM picked up in 2006 where NAND flash left off the year before," said Jeremey Donovan, research director at Gartner. "Outside of DRAM, wireless semiconductor sales once again drove strong performance in the industry."

Intel remained the No. 1 vendor in 2006, even as its revenue declined 9.5%. This is the15th year that Intel has been the No. 1 semiconductor vendor (see Table 1). Until the fourth quarter, Intel lost share as its CPUs in the server and consumer enthusiast segments were inferior to AMD’s in price/performance. Many PC OEMs increased their offerings of AMD-based platforms with Intel-only stalwart Dell ultimately opening its arms to AMD across mobile, desktop and server product families. Revenue was further eroded by an across-the-board price war, with Intel having more to lose as the larger vendor.

Table 1
Preliminary Top 10 Worldwide Semiconductor Vendors by Revenue Estimates (Millions of U.S. Dollars)

2006 Rank	2005 Rank	Company	2006 Revenue	2006 Market Share (%)	2005 Revenue	2005 Market Share (%)	2005-2006 Growth (%)
1	1	Intel	31,289	12.0	34,590	14.7	-9.5
2	2	Samsung Electronics	20,630	7.9	18,347	7.8	12.4
3	3	Texas Instruments	11,884	4.5	10,119	4.3	17.4
4	7	Infineon Technologies**	10,585	4.0	8,205	3.5	29.0
5	5	STMicroelectronics	9,872	3.8	8,821	3.8	11.9
5	4	Toshiba	9,872	3.8	8,984	3.8	9.9
7	6	Renesas Technology	7,907	3.0	8,291	3.5	-4.6
8	9	Hynix Semiconductor	7,710	2.9	5,723	2.4	34.7
9	14	Advanced Micro Devices	7,494	2.9	3,936	1.7	90.4
10	11	Freescale Semiconductor	6,052	2.3	5,599	2.4	8.1
		Top 10*	123,295	47.2	114,351	48.7	7.8
		Others	138,140	52.8	120,454	51.3	14.7
		Total Market	261,435	100.0	234,805	100.0	11.3

Note:* Top 10 calculation for 2005 includes revenues of $1736 million for ATI (acquired by AMD). AMD's revenues, including ATI for 2005, grew approximately 32.1% in 2006.
**Infineon’s total includes Qimonda.
Source: Gartner Dataquest (December 2006)

Samsung Electronics continued to gain share, as it accounted for 7.9% of the market. Samsung now dominates most areas of the memory market, holding the No. 1 position in DRAM, SRAM and the NAND flash markets.

Advanced Micro Devices moved into the top 10 in 2006. Consistent with Gartner’s longstanding practice, Gartner has included full year 2006 revenue for ATI in the results presented here. Combining AMD’s and ATI’s results for 2005, the combined entity grew semiconductor revenue by 32.1%.

Although market share results provide a good indication of which vendors did well or poorly during a year, it does not tell the entire story. Often, the performance of a vendor is based on the results of the overall segment growth of the device area in which the vendor participates. Gartner’s relative industry performance (RIP) index measures the difference between industry-specific growth for a company and actual growth, showing which are transforming their businesses by growing share or moving into new markets and choosing their customers wisely.

Elpida Memory achieved the best RIP ranking by outgrowing its market by 45.3%. "During the past two years, Elpida has increased its DRAM market share by adding huge amounts of capacity internally and through foundry partners, Powerchip Semiconductor and SMIC," Mr. Donovan said. "This market share gain was made easier because the major DRAM vendors, such as Samsung and Hynix, focused on the higher-bit-growth NAND flash market."

Not all vendors did so well, as Intel and Micron Technology underperformed their respective markets by 9.4% and 12.8%, respectively, and were placed at the bottom of the RIP ranking of top 25 vendors. As mentioned above, Intel suffered from price competition and share loss to AMD. Micron Technology experienced the downside of its product diversification strategy into CMOS image sensors and NAND-flash, posting slower growth than its DRAM-focused peers.

Though October monthly semiconductor sales were softer than expected on persistent inventory concerns, Gartner expects the remaining two months of the quarter to show moderate improvement, driven by ongoing strength in DRAM coupled with strong consumer electronics sell-through at retail. These factors, combined with industrywide reductions in capacity utilization, should propel the industry to high single-digit revenue growth in 2007. Gartner expects inventory levels to return to normal by the end of the first quarter of 2007, one quarter earlier than the correction that occurred in 2004 and 2005.

Additional information is available in the Gartner report "Market Share: Semiconductor Revenue, Worldwide, 2006 (Preliminary Estimates)." This report provides preliminary rankings for the top 25 companies worldwide, as well as the top 25 vendors based on relative industry performance. Regional market share results are also available for the Americas, EMEA, Asia/Pacific and Japan. The report is available on Gartner’s Web site at
http://www.gartner.com/DisplayDocument?ref=g_search&id=499195&subref=simplesearch.

This research is produced by Gartner's Semiconductors Worldwide group. This research group combines memory, microcomponents, logic, ASIC, analog, discrete device, RF and optical segments into a complete industry picture. Products, suppliers, startups, technologies, regional consumption, applications and emerging technologies are all covered in this broad program. To subscribe to this service, please contact Becky Tonnesen at 408-468-8287 or at becky.tonnesen@gartner.com. More information on Gartner's semiconductor research can be found on Gartner's Web site athttp://www.gartner.com/it/products/research/dataquest_cluster.jsp.

 

Contact:


Tom McCall
Gartner
+1 408 468 8312
tom.mccall@gartner.com


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