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 Back to 2005 Press Releases
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Despite Strong Demand in Some Segments, Worldwide Semiconductor Revenue is on Pace for Modest Growth in 2005, According to Gartner |
STAMFORD, Conn. 16 November 2005 — Although macroeconomic factors, such as the rise in the price of oil, and devastating natural disasters, such as Hurricane Katrina, had no noticeable effect on the semiconductor market this year, the market is settling into a pattern of modest growth during the next few years, according to the latest quarterly update by Gartner, Inc.
Worldwide semiconductor revenue is forecast to reach $235 billion in 2005, a 6.9 percent increase from 2004 revenue. In 2006, the market is forecast to grow 7.6 percent, before a mild slowdown in 2007 with growth of 5.1 percent.
“Semiconductor vendors remain conservative in their investment plans, which is enabling a continued gradual decline in supply-chain inventory levels and incremental improvement in manufacturing capacity utilization rates,” said Richard Gordon, managing vice president for Gartner's semiconductor research group.
Despite stellar growth in digital audio players and, by extension, NAND flash memory in the short term, there is somewhat of a void in semiconductor demand to be filled as the PC and digital cellular handset markets enter maturity. These two critical semiconductor applications, while benefiting from technology migration, are approaching saturation in terms of overall growth rates in system unit production and are, therefore, losing their ability to fuel strong growth in the semiconductor market.
In the case of the PC market, there are a couple of significant trends that will still benefit the semiconductor industry in coming years: the continuing shift in demand from desktop to mobile form factors, which have higher semiconductor dollar content, and the introduction of dual-core processors, which may have more impact than 64-bit microprocessors. In the digital cellular handset market, functional convergence (that is, the incorporation of functions such as digital still and video photography, digital audio playback and FM radio reception) and the move from second generation through 2.5G to third generation is sustaining semiconductor demand.
“This outlook shows that the industry is entering a new era of lower long-term growth and this market maturity is bringing with it more-sensible investment decision-making by semiconductor vendors,” said Mr. Gordon. “It remains to be seen whether capital spending will continue to be controlled in the future in order to maintain a better balance between supply and demand and therefore reduce market volatility.”
Additional information is available in the Gartner report “Forecast: Semiconductors, Worldwide, 2002-2010 (Q4 Update)”.
A more detailed breakout of the semiconductor forecast is available to clients of Gartner's Semiconductor Forecast Worldwide program. This program provides a comprehensive forecast database, which contains a detailed breakdown of the semiconductor forecast by application and by device. This industry leading electronically delivered publication refreshes semiconductor forecast data for 100 applications and 40 device types each quarter. To subscribe to this service, please contact Pia Rieppo at 408-468-8710 or at pia.rieppo@gartner.com. More information on Gartner's semiconductor research can be found at www.gartner.com.
Gartner analysts will provide additional analysis on the semiconductor industry at the Gartner Semiconductor Industry Outlook Local Briefing, to be held December 6, 2005, at the Double Tree Hotel in San Jose. Gartner Dataquest's Semiconductor Industry Outlook: System on Chip Defines the Battle Lines will provide a detailed semiconductor market update covering device, application and manufacturing issues, plus a look at the hottest and “must target” applications for system on chip (SoC) devices and Gartner's views of the future of SoC markets and technology.
For complete event details, please visit the Semiconductor Industry Outlook Local Briefing Web site. Members of the media can register by contacting semiconductor.briefing@gartner.com
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About Gartner:
Gartner, Inc. (NYSE: IT) is the leading provider of research and analysis on the global information technology industry. Gartner serves more than 9,000 clients, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions. The Company's businesses consist of Research and Events for IT professionals; Gartner Executive Programs, membership programs and peer networking services; and Gartner Consulting, customized engagements with a specific emphasis on outsourcing and IT management. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, and has more than 3,900 associates, including more than 1,200 research analysts and consultants, in more than 75 countries worldwide. For more information,
visit www.gartner.com.
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