Forgettable year for memory chip makers

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Forgettable year for memory chip makers

iSuppli releases preliminary 2008 semiconductor rankings

Tuesday, December 02, 2008

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EL SEGUNDO, USA: For memory chip makers, 2008 will go down as a year to forget, as a major downturn in this segment caused revenue to fall for nearly all suppliers and contributed to negative results for the overall semiconductor industry, according to preliminary market-share figures from iSuppli Corp.

"Global semiconductor revenue is expected to decline by 2 percent in 2008 due to a 16.9 percent plunge in sales of memory Integrated Circuits (ICs), said Dale Ford, senior vice president, market intelligence services, for iSuppli. "Only two out of the Top-29 memory IC suppliers, i.e. companies that are expected to earn roughly $100 million or more in 2008, will see their memory IC revenue grow in 2008. For the memory IC business, 2008 can only be described as disastrous."

Semiconductor slump
If memory revenue was excluded from the total semiconductor market in 2008, the remaining chip industry would grow by 2 percent in 2008, according to iSuppli's preliminary estimate. Memory will account for 17.9 percent of global semiconductor revenue in 2008.

However, the downturn in semiconductor revenue in 2008 is not entirely limited to memory suppliers. Six of the Top-10 semiconductor suppliers are expected to suffer revenue declines in 2008, including some companies that are not focused on memory: Texas Instruments Inc. of the United States and Renesas Technology Corp. and Sony Corp. of Japan.

"In the face of increasingly negative economic news, orders for semiconductors have virtually stopped, leading to great fear and uncertainty throughout the entire semiconductor industry," Ford noted.

Table 1 presents iSuppli's preliminary ranking of the world's Top-20 semiconductor suppliers in 2008. iSuppli plans to issue a final market-share ranking in early 2009.

Source: iSuppli Corp. November 2008

No thanks for the memories
Among the world's Top-20 semiconductor suppliers, the memory IC suppliers will experience some of the largest declines in revenue, according iSuppli's preliminary ranking. The worst performer among the Top-20 chip suppliers is expected to be South Korean memory chip maker Hynix Semiconductor Inc. whose revenue is set to drop by 29.1 percent in 2008. This $2.6 billion revenue decline is expected to cause Hynix's global semiconductor ranking to fall by three positions to ninth place in 2008, down from sixth in 2007.

Another memory supplier among the Top-20 semiconductor makers, Micron Technology Inc. of the United States, is set for a 9.2 percent revenue decrease in 2008, causing its ranking in the overall semiconductor market to slip by one position to 16th place. The world's largest memory IC supplier and the globe's No.-2 chipmaker, Samsung Electronics Co. Ltd. of South Korea, is set for a 9.1 percent revenue decline for the year.

Japanese memory supplier Toshiba Corp. is set to undergo a 5.9 percent decline in overall semiconductor revenue in 2008, but the company will maintain its fourth-place ranking.

Among the world's Top-10 memory IC suppliers, the largest declines in revenue will be suffered by Germany's Qimonda AG, with a plunge of 40.7 percent; Hynix, with its 29.1 percent drop; Taiwan's Nanya Technology Corp., with another 29.1 percent decrease and Powerchip Semiconductor Corp., also of Taiwan, with a 23.4 percent reduction.

Slipped memories
The year 2008 will mark the second consecutive annual revenue contraction in global memory IC revenue, following a 3.9 percent decline in 2007.

Every memory segment will decline in 2008, with DRAM leading the way down, at a 19.8 percent decline in revenue. NOR-type flash memory will suffer a 16.2 percent drop and SRAM revenue will decline by 16.1 percent.

NAND-type flash memory, commonly used for data storage in products like Personal Media Players (PMPs), will fare slightly better than the other major memory types, with a 13.1 percent decrease in revenue. However, this is the first time in the history of the NAND flash market that revenue will decline on an annual basis.

Asia/Pacific region gets mauled by memory
The impact of the memory market decline is evident in the overall performance of companies headquartered in the Asia/Pacific region. As a group, these companies are expected to see their revenue contract by 11.2 percent, according to iSuppli's preliminary estimate.

The region's share of global semiconductor revenue will decline to 16.8 percent in 2008, down from 18.5 percent in 2007.

Japanese semiconductor companies also are expected to see their collective revenues decline by 1.1 percent. iSuppli projects that companies headquartered in the Europe, Middle East and Africa (EMEA) and the Americas will see their revenue grow by 0.8 percent and 0.5 percent respectively in 2008.

Table 2 presents iSuppli's preliminary estimate of 2008 semiconductor revenue by global region.

Table 2: Preliminary Estimate of Global Semiconductor Revenue in 2008 by Company Headquarters Location (Revenue in Millions of U.S. Dollars)

Table 2: Preliminary Estimate of Global Semiconductor Revenue in 2008 by Company Headquarters Location (Revenue in Millions of U.S. Dollars)

Source: iSuppli Corp. November 2008

Silver lining sighted?
"About the only good thing that can be said about the 16.9 percent decline in memory revenue in 2008 is that it pales in comparison to the 48.2 percent plunge in 2001," Ford said. "However, the dot-com-bust decline in 2001 was preceded by a 42.7 percent surge in 2000."

Looking beyond memory, a few segments of the semiconductor industry are expected to experience strength in 2008.

The Programmable Logic Device (PLD) market is set to enjoy healthy growth in 2008 with revenue increasing by 7.6 percent. This market is led by US suppliers Xilinx Inc., with expected 6.5 percent growth in 2008, and Altera Corp., whose PLD revenue is set to rise by 12.1 percent.

Optical components are expected to achieve 6.2 percent global revenue growth in 2008. Major companies expected to benefit from the healthy expansion in this market in 2008 are Sharp Electronics, Panasonic, Avago Technologies, Samsung and Hamamatsu Photonics.

Revenue for the global microprocessor market, led by Intel Corp., is expected to grow by 5.7 percent in 2008. US-based Intel, the world's largest semiconductor supplier, will outperform the overall market with a 0.4 percent increase in total revenue.

Other semiconductor categories that are expected to enjoy relatively strong growth in 2008 are microcontrollers, with a revenue increase of 3.3 percent, and logic application-specific ICs with a 3 percent rise.

Star performers
Based on its expected revenue growth of 19.6 percent, Qualcomm Inc. is expected to jump five places to number 8 in the rankings in 2008, up from number 13 in 2007, marking its inaugural entry into the annual semiconductor Top-10. Qualcomm of the United States will be the first fabless semiconductor company to enter the ranks of the annual Top 10.

The strongest performer among the Top-20 in 2008 will be Broadcom Corp., another US fabless company, which is expected to achieve growth of 26.4 percent. This will propel it up the ranks by five positions, rising to 14th place, up from 19th in 2007.

The creation of the ST-NXP Wireless joint venture in 2008 is having a notable impact on the growth of STMicroelectronics and NXP. iSuppli has consolidated all revenues from this new business under STMicroelectronics and this added revenue is expected to help the company to achieve 7.1 percent growth in 2008. On the other hand, the separation of this business will contribute to an expected decline of 23.9 percent in NXP revenue in 2008, causing its rank to fall to 17th place, down from 11th before.
Source: iSuppli, USA

©CIOL Bureau

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yeszi said on 12/27/2008 3:57:55 PM:
bailouts cant help memory makers

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