IDC: Chip market on way back after recession

Computerworld - A rise in PC chip shipments in the last quarter of 2009 indicates that the market is on its way back after the dark days of the recession, according to an IDC report released today.

The research firm reported this morning that worldwide PC microprocessor shipments were up 31.3% in the final 2009 quarter compared to the same period in 2008. The picture wasn't so rosy for all of 2009, though.

IDC said that revenue from PC processor sales declined 7.1% to $28.6 billion while unit shipments grew by only 2.5%.

"Compared to 3Q09, the modest rise in shipments in 4Q09 indicates that the market is returning to normal seasonal patterns," said Shane Rau, a director at IDC, in a statement. "Compared to 4Q08, the huge rise in shipments indicates that the market has put the recession behind it. Both comparisons indicate that the PC industry anticipates improvement in demand in 2010."

The firm said today it has raised its 2010 forecast for growth in PC processor unit shipments to 15.1% compared to 2009.

"We're looking forward to the end of the second quarter and the second half of the year as corporations qualify new client and server platforms and open up their IT budgets further," said Rau. "Combined with healthy consumer spending, the resumption of corporation spending will lead to a healthy 2010."

IDC's report is the latest indication that the chip industry may be pulling itself - and some say the entire U.S. economy - out of the economic doldrums.

Last October, Intel Corp. CEO Paul Otellini contended that the economy had already hit bottom and the corporate executives would soon have to start spending money to replace thousands of aging PCs.

Otellini's comments came a few weeks after Intel posted third-quarter earnings that beat analyst expectations and prompted exectives to cite a growing positive "momentum" in the economy.

A month later, Gartner Inc. predicted that global semiconductor revenue would rebound in 2010 from sales declines of more than 10% in 2009. Gartner predicted that 2010 worldwide semiconductor revenue would hit $255 billion, up 13% from 2009 and about the same as 2008.

On the other hand, Morgan Stanley late last year unleashed a torrent of downgrades on the semiconductor industry, taking some steam out of projections that chip companies like Intel are mounting a comeback.

IDC also noted today that Advanced Micro Devices gained share in the worldwide processor market in the fourth quarter at the expense of Intel.

Intel shipped 80.5% of PC microprocessors worldwide during the fourth quarter, a slight drop from an 81.9% share it held in the fourth quarter of 2008, IDC reported. AMD's market share improved to 19.4% during the fourth quarter compared to 17.7% a year earlier.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, send e-mail to sgaudin@computerworld.com or subscribe to Sharon's RSS feed .

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