Asia-Pacific semiconductor suppliers defy downturn in 2009

EL SEGUNDO, USA: The global semiconductor industry suffered a sharp downturn in 2009—but no one bothered to tell the Asia-Pacific-based chipmakers.

Combined revenue for semiconductor suppliers headquartered in the Asia-Pacific region actually grew by 2.3 percent in 2009 to reach $44.5 billion, up from $43.5 billion in 2008. In contrast, global semiconductor revenue in 2009 fell by 11.7 percent to $229.9 billion, down from $260.2 billion in 2008.

“In a dismal year for the chip industry, suppliers based in Asia-Pacific managed to eke out some growth in 2009 as they focused on hot semiconductor products and capitalized on strong demand from the region,” said Dale Ford, senior vice president, market intelligence services, for iSuppli.

“These companies represented some of the leading players in hot-selling product segments in 2009, including NAND flash and Light-Emitting Diodes (LEDs). They also were able to cash in on semiconductor sales driven by China’s stimulus plan, which spurred massive consumer spending on a range of electronic products during the year.”

Shipments of semiconductors to Asia-Pacific declined by only 5.3 percent in 2009—by far the best performance of any major worldwide region for the year. In contrast, Japan’s revenue fell by 20.7 percent, Europe-Middle East-Africa declined by 20.5 percent and the Americas region decreased by 10.5 percent.

Table 1 presents iSuppli’s final regional semiconductor revenue estimate for 2009.

Table 1: Final Total Semiconductor Revenues by Region (Revenue Millions of US Dollars)Source: iSuppli, USA, Mar. 2010

South Korean and Taiwanese suppliers clean up
Only two major semiconductor product segments escaped the downturn of 2009: LEDs and NAND flash memory. With expanding demand from mobile products such as cell phones, the NAND Flash market grew by more than 15 percent in 2009. LEDs saw a rapid rise in adoption in a wide range of applications, especially in backlighting of LCD-TVs, causing their revenue to rise by more than 5 percent.

This particularly benefitted the South Korean companies that concentrate on these products. Leading NAND flash suppliers Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. were the only semiconductor suppliers among the world’s Top 10 chipmakers to achieve growth for the year. Meanwhile, LED maker Seoul Semiconductor Inc. saw its revenues leap by nearly 90 percent for the year.

South Korean-headquartered semiconductor suppliers collectively achieved 3.6 percent revenue growth in 2009. More than three-quarters of all South Korean suppliers tracked by iSuppli posted revenue growth in 2009.

The same product and demand trends also benefitted Taiwanese suppliers in 2009, with suppliers based in the country collectively expanding their revenue by 1.1 percent during the year. More than half of Taiwanese suppliers achieved revenue growth in 2009. MediaTek, Nanya Technology and Macronix International led the way for Taiwan with growth of 22.6 percent, 21.2 percent and 14.4 percent, respectively, for the year.

Table 2 presents iSuppli’s final global semiconductor revenue ranking for 2009.

Table 2: Final Global Revenue Ranking for the Top-25 Semiconductor Suppliers in 2009 (Revenue in Millions of US Dollars)Source: iSuppli, USA, Mar. 2010

Silver lining for 2009
“While 2009 was a difficult year for the semiconductor business, it could have been much worse, based on the state of the market in the first quarter,” Ford said. “However, on a sequential quarterly growth basis, the market finished the year on a very strong note.”

After seeing revenue plunge by more than 18 percent in the first quarter of 2009, the market recovered with strong quarterly sequential growth of more than 18 percent in the second and third quarters and more than 10 percent growth in the fourth quarter.
“The final three months of 2009 actually delivered the strongest fourth-quarter sequential growth the semiconductor industry has experienced in 10 years,” Ford observed.

Semi winners
Out of approximately 300 semiconductor suppliers measured by iSuppli, two-thirds suffered falling revenues in 2009.

Only four of the Top 25 semiconductor suppliers were able to increase their revenues in 2009. Three of the four companies that were able to grow in 2009 are memory suppliers: Samsung, Hynix and Elpida Memory. MediaTek’s dramatic growth in 2009 allowed it to jump eight places in the market rankings to No. 16—its rise fueled by the company’s major success as a supplier of semiconductors into mobile handsets and wireless connectivity products in Asia.

Six other companies among the top 25 were able to perform notably better than the market in 2009.

As it continues to expand its share of the mobile handset market, Qualcomm saw its revenue decline by only 1.1 percent. Driven by a rebounding microprocessor market, Intel Corp. and Advanced Micro Devices Inc. (AMD) were able to limit their revenue declines to 4 percent and 4.6 percent, respectively.

The stronger memory market was behind the relatively robust performance of Micron Technology Inc. and Toshiba Corp. If Micron had not spun off its image sensor business, its revenue would have grown by more than 8 percent in 2009. Micron’s memory business grew by more than 13 percent. Finally, Broadcom’s growing revenues from wireless communications helped it limit its revenue decline to under 8 percent.

On a bright note, out of the 300 companies measured by iSuppli, 20 percent were able to grow their revenue by double-digit percentages and 12 companies were able to expand by more than 50 percent during the year.

In addition to MediaTek, five other companies made notable advances up the rankings of the top 25. Qualcomm and Hynix both moved up two positions, to No. 6 and No. 7, respectively. Micron moved up three places to No. 13 and Elpida Memory jumped up four places to No. 15. Freescale Semiconductor dropped four places down to No. 17 and Renesas Technology, Sony, and Panasonic Corp. all fell three places.

It should be noted that when the merger of Renesas Technology and NEC Electronics is completed, the combined company would be ranked at No. 5 with combined revenues of more than $9.5 billion.

Casualties of the downturn
The hardest hit companies among the Top 25 suppliers were Sony Corp. and Freescale Semiconductor Inc. with revenue declining by more than 30 percent during the year. Sony suffered from its struggles in the consumer electronics market while Freescale’s revenue was hit by its exit from the mobile handset market.

Six other companies among the Top 25 saw their revenues drop by more than 20 percent: Renesas Technology, Infineon Technologies, NEC Electronics, Panasonic Corporation, NXP and ROHM Semiconductor. It should be noted that Infineon’s revenue was impacted by its spinoff of Lantiq. The combined revenues of Infineon and Lantiq fell by less than 17 percent.

Analog clocked
A total of 12 major semiconductor segments saw revenues decline by more than 20 percent in 2009. The hardest-hit segments were laser diodes, Charge-Coupled Devices (CCDs), ASICs, NOR flash memory and SRAM, all with declines of more than 25 percent.

Among the major semiconductor market segments of memory, microcomponents, logic Integrated Circuits (ICs), analog ICs, discretes, optical and sensors, it was analog ICs that saw the biggest drop in 2009 with revenue falling by 16.9 percent.

Less pain for wireless
Sales of semiconductors into the wireless communications and data processing markets suffered the smallest declines in 2009 with decreases of 7.0 percent and 8.6 percent, respectively.

The hardest-hit market was automotive electronics, where semiconductor sales fell by 23.8 percent in 2009.

Source: iSuppli, USA