Global semiconductor market to grow 4.6 percent as revenue reaches $314 billion in 2011

STAMFORD, USA: As the semiconductor industry completes one of its most successful years in 2010, the market is positioned for continued, albeit slower, growth in 2011, according to the latest outlook by Gartner Inc.

Worldwide semiconductor revenue is forecast to total $314 billion in 2011, up 4.6 percent from 2010's estimated revenue of $300.3 billion.

Worldwide semiconductor revenue is on pace to grow 31.5 percent in 2010, as the industry is expected to surpass the $300 billion mark for the first time in its history. However, a modest chip correction began in the third quarter of 2010, and Gartner analysts estimate it's going to last four quarters.

"Third-quarter sequential semiconductor revenue growth was below the seasonal norm, and company guidance indicates that fourth-quarter growth will also fall short and likely become negative for the first time in six quarters," said Bryan Lewis, research vice president at Gartner.

"The third quarter of 2010 was the turning point, as semiconductor manufacturing factory utilization rates peaked midyear and subsequently started to reduce chip lead times and average selling prices. Strong holiday electronic sales will be important in keeping the modest chip correction in check as we start 2011."

The memory segment forecast calls for the strongest semiconductor growth in 2010 as revenue will increase 49.8 percent. However, the memory market is the only segment forecast to decline in 2011, with revenue forecast to decrease 2.4 percent.

DRAM is expected to decline 15.6 percent in 2011 due to weaker-than-expected PC demand and declining DRAM prices. NAND memory, however, is expected to grow 24%, as it is the main storage medium designed into many hot consumer electronic products.

From an application perspective, smartphones, mobile PCs and media tablets will fuel semiconductor growth through 2014. Media tablets are seeing rapid growth due to the success of the Apple iPad, and the market will continue to see strong growth with greater competition in this space. Gartner estimates that semiconductor revenue from media tablets will grow from $2.4 billion in 2010 to $17.8 billion in 2014.

In the PC market, consumer PC purchases have been below expectations, and the enterprise PC replacement cycle has weakened. However, some of this slowdown is being made up for by stronger-than-expected sales of media tablets.

Semiconductor revenue from PCs is forecast to total $64 billion in 2010, a 34.8 percent increase from 2009. In 2011, semiconductor revenue from PCs is projected to decline 3.2 percent to $62 billion. The decline is the result of reduced DRAM prices in 2011. Revenue for other PC semiconductor components, including CPUs, will increase.

The outlook for mobile phone production has improved. Overall semiconductor revenue from mobile phones is on pace to total $48.7 billion in 2010, a 23.2 percent increase from 2009. In 2011, worldwide semiconductor revenue from mobile phones is projected to reach $55.4 billion, a 13.6 percent increase from 2010.