Semiconductor revenue hits double-digit growth

Despite softer than anticipated sales as a result of persistent inventory concerns in October, Gartner believes that results for the final two months of the year will show that the market has regained ground.

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By  Published  December 16, 2006

Worldwide semiconductor revenue is expected to climb by more than 11% in 2006 to create a market in excess of US$261 billion, according to analyst firm Gartner.

Despite softer than anticipated sales as a result of persistent inventory concerns in October, Gartner believes that results for the final two months of the year will show that the market has regained ground.

It claimed the double-digit growth expected for 2006 is largely attributed to healthy year-on-year demand for DRAM.

“Strong growth in DRAM picked up in 2006 where NAND flash left off the year before,” said Jeremey Donovan, research director at Gartner.

“Outside of DRAM, wireless semiconductor sales once again drove strong performance in the industry,” he added.

Intel is set to take the number one position for the 15th consecutive year with a 12% share of the market, despite the likelihood that it will be one of only two top-ten semiconductor vendors — along with Renesas Technology — to suffer a decline in revenues.

According to Gartner, Intel’s 2006 sales are poised to slip by just over 9% to US31 billion.

Gartner maintained that until the fourth quarter, Intel lost market share as its CPUs in the server and consumer enthusiast segments were ‘inferior’ to AMD’s in price and performance.

It added that many PC original equipment manufacturers (OEMs) have increased their offerings of AMD-based platforms throughout the year, including computer giant Dell, which finally shed its tag as an Intel-only vendor by embracing AMD across some of its product families.

A savage price battle has also contributed to the erosion in Intel’s revenue with the company more exposed to the issue than other players in the market due to its leadership position.

Meanwhile, second-placed Samsung is expected to consolidate its position by growing 2006 semiconductor sales 12% year-on-year to US$20.6 billion.

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