According to a final marketshare analysis by Gartner, worldwide semiconductor revenue totaled US$255 billion in 2008, down 5.4 percent, or a decrease of $14.5 billion from 2007 revenue. The steep decline in the market in the final quarter of 2008, combined with the ongoing economic weakness, signals far worse declines in 2009.
"While sales held up fairly well in the first half of 2008, in the third quarter the industry started to soften as the economy slowed, and by the fourth quarter sales were deteriorating quickly, causing revenue growth to go into negative territory," said Peter Middleton, principal research analyst at Gartner. "With the market heavily impacted by the recession, we can expect considerable market consolidation going forward."
Gartner's annual semiconductor market share analysis examines and ranks the worldwide and regional revenue for more than 275 semiconductor suppliers, in 65 separate product categories, and eight major market categories. It serves as a benchmark for both semiconductor industry performance, as well as a means for individual companies to assess their revenue performance against their competitors.
Intel held the No. 1 position for the 17th consecutive year, in this analysis, increasing its market share to 13.3 percent in 2008, although it saw its revenue decline by 0.5 percent ― a consequence of spinning off its NOR flash memory business (see Table 1). The company outperformed the industry average due to the strong performance of its notebook business in which the company gained share throughout the year.
The best performer among the 2008 top 10 in Gartner's market share analysis was Qualcomm, with growth of 15.3 percent. This growth was driven by a strong first three quarters of the year, but Qualcomm felt the impact of the economic downturn in the fourth quarter of 2008 as carriers and OEMs reduced their inventory of code division multiple access (CDMA)-based devices and chipsets.
Samsung, the No. 2 vendor, saw its revenue decline 15 percent in 2008 with the company's main product lines, DRAM and NAND flash experiencing sharp price declines caused by excess supply in the market during 2008. Toshiba, in the No. 3 position, saw its revenue decrease 10.3 percent, largely because its application-specific integrated circuit (ASICs) and application-specific standard products (ASSPs) for consumer, wireless and automotive electronics showed mild growth in early 2008, but the market went into free-fall in the second-half due to the global economic downturn.
Vendor Relative Industry Performance
Market share tables by themselves give a good indication of which vendors did well or badly during a year, but they do not tell the whole story. More often than not, a strong or weak performance by a vendor is a result of the overall market growth of the device areas that the vendor participates in. 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.
Broadcom led the RIP ranking in 2008. In the consumer ASSP business, it benefited from solid performance in the core set-top box business, augmented by Blu-ray and digital TV products and the sale of digital converter boxes for the DTV conversion in the United States. In wired communications ASSPs, Broadcom padded its considerable lead over No. 2 Infineon Technologies. Ethernet switches and broadband modem chip sales sparked this performance. In wireless ASSPs, the company grew strongly in a declining market, mainly due to sales of connectivity products, including Bluetooth, Wi-Fi and GPS.
Elpida Memory was the No. 2 vendor in Gartner's RIP ranking. Its strong performance in the ranking was because of its ability to add capacity in the DRAM market faster than the market declined, thus showing only a slight revenue decline in a market that saw strong double-digit declines.
This story, "Semiconductor Sales Slip Worldwide" was originally published by Channelworld-India.