Chip Sales Set for Modest Growth in 2010

Thanks to a lot of pent-up demand ahead of the highly anticipated release of Windows 7 last fall chipmakers recorded unexpectedly strong sales growth in the third and fourth quarter of last year.

But, as Hardware Central explains, early checks of the semiconductor supply chain suggest that momentum won’t carry over into 2010 even though the year-over-year comparisons will suggest otherwise.

Right now, iSuppli is forecasting worldwide semiconductor sales growth of 21.5 percent from last year. Normally, a spike of that size would be cause for celebration. But it’s actually just the latest reminder of just how bad things were last year and how little enterprises were willing to spend on capital equipment during this prolonged recession.

If iSuppli’s figures are on the mark, leading semiconductor firms such as Intel and AMD will enjoy sales growth this year that’s only up about 8 percent from 2008 and only a little over 2 percent better than those recorded in 2007.

“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,” iSuppli Senior Vice President Dale Ford said in a statement. “However, conditions in 2010 appear so fantastic only in comparison [to] 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.”

Downturns in the semiconductor industry have historically have been driven by supply and demand dynamics in the technology market, Ford noted. In this instance, sales took a nosedive when companies ceased capital expenses amid the battered economy.

Read the full story at Hardware Central:

Semiconductor Sales Recovery Loses Steam

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