Semiconductor Market Won't Grow Overmuch in 2011

With the NAND and DRAM market going through a bit of a rough period, market analysts looked forward and tried to figure out how the situation would progress for 2011, and it seems that growth won't be as high as some may like.

Since the year is almost over, analysts are already studying the composition of the market and each segment in particular.

The semiconductor market is one that can be seen as unusual, since some parts of it are doing more or less fine while others are facing oversupply and falling prices.

The NAND and DRAM markets were the ones most hit by low demand and overgrown inventories, though only over the past one or two months..

For the whole of 2010, semiconductor revenues will actually grow over those of 2009 by 31.5 %.

According to market analyst firm Gartner, this will imply that the $300 billion threshold will be broken for the first time.

Memory revenues will jump by 49.8%, even despite how spot prices have been dropping.

"Third-quarter sequential semiconductor revenue growth was below the seasonal norm, and company guidance indicates that fourth-quarter growth will also fall short and likely become negative for the first time in six quarters," said Bryan Lewis, research VP at Gartner.

"The third quarter of 2010 was the turning point, as semiconductor manufacturing factory utilization rates peaked midyear and subsequently started to reduce chip lead times and average selling prices. Strong holiday electronic sales will be important in keeping the modest chip correction in check as we start 2011," he added.

On the other hand, 2011 will see DRAM dropping as far as sales go, by 15.6%, while NAND will grow by 24%, spurred by tablets, new smartphones and the growing SSD market.

For PCs alone, revenues will total US$64 billion in 2010 and will drop to US$62 billion in 2011 (by 3.2%), all because of declining DRAM prices.