While conditions in the global semiconductor industry in 2010 are set to improve dramatically compared to a dismal 2009, the reality is that this year is likely to deliver only a modest recovery when viewed from a longer-term perspective, according to iSuppli.
Global semiconductor revenue in 2010 is set to amount to US$279.7 billion, iSuppli predicted. While this represents a striking 21.5 percent rise from $230 million in 2009, it amounts to only an 8 percent increase from $258.9 billion in 2008, and a scant 2.3 expansion compared to $273.4 billion in 2007.
With market conditions in 2009 dictated by macroeconomic factors that were independent of the technology business, comparisons with 2007 and 2008 provide a more accurate depiction of 2010 semiconductor market conditions, iSuppli said.
"Amid double-digit growth in revenue, rising prices, supply constraints and soaring capital equipment purchases, enthusiasm over the semiconductor industry's 2010 outlook has hit a fever pitch," said Dale Ford, Senior VP, Market Intelligence Services, for iSuppli. "However, conditions in 2010 appear so fantastic only in comparison of 2009. In reality, 2010 is likely to simply be a year when semiconductor industry growth on a sequential quarterly basis returns to a more normal pattern."
When viewed as a 12-month rolling average, monthly semiconductor revenue in 2010 is set to recover at the strongest rate in history, according to iSuppli.
However, this growth comes only in comparison to the depressed levels of 2009, a year when semiconductor market conditions faced an unprecedented type of downturn.
"Downturns in the semiconductor business historically have been driven by supply and demand dynamics within the technology market," Ford said. "For example, the downturn of 2001 was spurred by factors such as the dot-com bust, a strong drop in PC sales and semiconductor manufacturing excess capacity. However, 2009 marked the first time a downturn in the semiconductor industry was driven primarily by the macroeconomic environment. Seen in this context, the 21.5 percent annual rise in semiconductor revenue expected in 2010 actually represents a return to demand levels of 2007 rather than a dramatic growth surge."