Gartner to slash 2009 chip forecast by $25B

IDG News Service - The global financial crisis has prompted market research firm Gartner Inc. on Monday to lower its preliminary chip industry revenue projections for the next few years, including a $25.5 billion reduction for next year.

Although Gartner's formal report on the chip industry won't be finalized until the end of November, the researcher said it revised down its preliminary 2008 chip industry revenue-growth forecast to just 2% to $279.4 billion, from a previous estimate of 4.2% growth.

As job losses mount and business and consumer spending tightens next year, the chip industry will face even tougher pressures. Gartner predicts 2009 semiconductor industry revenue will rise only 1% year on year to $282.2 billion. Previously, Gartner had forecast growth of 7.8% to $307.7 billion.

In a worst-case scenario, chip industry revenue could decline 10.3% next year, Gartner said.

"In a recession, it is important to remember that there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content," said Gartner analyst Bryan Lewis in the "Semiconductor DQ Monday Report."

The chip sector will likely rebound in 2010, posting 10.5% growth on revenue of $311.8 billion, Gartner said.