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“The market is maturing, and it’s time for further integration,†said Bryan Lewis, vice president of semiconductor research at Gartner. “If you don’t have a clear path of scale or value, it’s worth considering exiting the city.â€
The chip industry is expected to grow only 2.9% this year, down from 3.9% predicted earlier. 2008 is expected to grow only 6.2%, lower than the previous forecast of 8.2%. The good news is that Gartner now forecasts an 8.5% increase in the chip industry in 2009, which is higher than the previous estimate of 6.1%. Overall, Gartner predicts a compound annual growth rate of 4.8% for the semiconductor industry in 2006-2011.
The price pressures in the growth consumer markets such as mobile phones and LCD TVs continue, and the oversupply of DRAM is the main reason for the above difficulties. Lewis warned that if crude oil prices do not fall and the annual holiday season sales are not satisfactory, chip sales may fall by about 5% next year.
Gartner analysts have not predicted that the US economy will enter a recession in 2008. But in the November forecast, this possibility has risen from 10% in June to 35%.
The 32-nanometer design will begin to appear in 2009 and will begin production in 2010, when the industry situation will deteriorate. The cost of developing a 32nm design from scratch can be as high as $75 million.
“This will drive integration and collaboration,†Lewis said. He advises chipmakers and OEMs to move to configurable platforms such as OMAP from Texas Instruments or Nexperia from NXP Semiconductors. "When we move to 32nm, these silicon platforms will be indispensable." For chip makers, 32nm process development costs can be as high as $3 billion, twice the 65nm process technology. Lewis said the cost of the 32nm chip factory is estimated to be $3.5 billion.
Gartner published a report earlier, saying that the number of ASIC designs (designstart) will be reduced by 4% next year. However, the complexity and price of these chips are rising slightly.
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Market research firm Gartner has reduced its growth forecast for the semiconductor industry this year and next. It warned that as the industry moves toward 32-nanometer process technology, the situation will only become more difficult. Analysts said at the annual briefing held recently that the industry may still fall into recession next year, depending on some factors in the macro economy. In addition, Gartner released preliminary market share data for 2007, showing that Toshiba, Qualcomm and Hynix Semiconductor are the biggest winners, while AMD, Freescale and IBM are the biggest losers.