Not all regions had a bad year

The global semiconductor industry suffereda sharp downturn in 2009—but no one bothered to tell the Asia-Pacific-basedchipmakers. Combined revenue for semiconductor suppliers headquartered in theAsia-Pacific region actually grew by 2.3 percent in 2009 to reach $44.5billion, up from $43.5 billion in 2008. In contrast, global semiconductorrevenue in 2009 fell by 11.7 percent to $229.9 billion, down from $260.2billion in 2008.

“In a dismal year for the chip industry,suppliers based in Asia-Pacific managed to eke out some growth in 2009 as theyfocused on hot semiconductor products and capitalized on strong demand from theregion,” said Dale Ford, senior vice president, market intelligence services,for iSuppli. “These companies represented some of the leading players inhot-selling product segments in 2009, including NAND flash and Light-EmittingDiodes (LEDs). They also were able to cash in on semiconductor sales driven byChina’s stimulus plan, which spurred massive consumer spending on a range ofelectronic products during the year.”

Shipments of semiconductors to Asia-Pacificdeclined by only 5.3 percent in 2009—by far the best performance of any majorworldwide region for the year. In contrast, Japan’s revenue fell by 20.7percent, Europe-Middle East-Africa declined by 20.5 percent and the Americasregion decreased by 10.5 percent.

Only two major semiconductor productsegments escaped the downturn of 2009: LEDs and NAND flash memory. Withexpanding demand from mobile products such as cell phones, the NAND Flashmarket grew by more than 15 percent in 2009. LEDs saw a rapid rise in adoptionin a wide range of applications, especially in backlighting of LCD-TVs, causingtheir revenue to rise by more than 5 percent.

This particularly benefitted the SouthKorean companies that concentrate on these products. Leading NAND flashsuppliers Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. were theonly semiconductor suppliers among the world’s Top 10 chipmakers to achievegrowth for the year. Meanwhile, LED maker Seoul Semiconductor Inc. saw itsrevenues leap by nearly 90 percent for the year.

South Korean-headquartered semiconductorsuppliers collectively achieved 3.6 percent revenue growth in 2009. More thanthree-quarters of all South Korean suppliers tracked by iSuppli posted revenuegrowth in 2009.

The same product and demand trends alsobenefitted Taiwanese suppliers in 2009, with suppliers based in the countrycollectively expanding their revenue by 1.1 percent during the year. More thanhalf of Taiwanese suppliers achieved revenue growth in 2009. MediaTek, NanyaTechnology and Macronix International led the way for Taiwan with growth of22.6 percent, 21.2 percent and 14.4 percent, respectively, for the year.

“While 2009 was a difficult year for thesemiconductor business, it could have been much worse, based on the state ofthe market in the first quarter,” Ford said. “However, on a sequentialquarterly growth basis, the market finished the year on a very strong note.”

After seeing revenue plunge by more than 18percent in the first quarter of 2009, the market recovered with strongquarterly sequential growth of more than 18 percent in the second and thirdquarters and more than 10 percent growth in the fourth quarter. 

“The final three months of 2009 actuallydelivered the strongest fourth-quarter sequential growth the semiconductorindustry has experienced in 10 years,” Ford observed.

Out of approximately 300 semiconductorsuppliers measured by iSuppli, two-thirds suffered falling revenues in 2009.

Only four of the Top 25 semiconductorsuppliers were able to increase their revenues in 2009. Three of the fourcompanies that were able to grow in 2009 are memory suppliers: Samsung, Hynixand Elpida Memory. MediaTek’s dramatic growth in 2009 allowed it to jump eightplaces in the market rankings to No. 16—its rise fueled by the company’s majorsuccess as a supplier of semiconductors into mobile handsets and wirelessconnectivity products in Asia.

Six other companies among the top 25 were ableto perform notably better than the market in 2009.

As it continues to expand its share of themobile handset market, Qualcomm saw its revenue decline by only 1.1 percent.Driven by a rebounding microprocessor market, Intel Corp. and Advanced Micro DevicesInc. (AMD) were able to limit their revenue declines to 4 percent and 4.6percent, respectively.

The stronger memory market was behind therelatively robust performance of Micron Technology Inc. and Toshiba Corp. IfMicron had not spun off its image sensor business, its revenue would have grownby more than 8 percent in 2009. Micron’s memory business grew by more than 13percent. Finally, Broadcom’s growing revenues from wireless communicationshelped it limit its revenue decline to under 8 percent.

On a bright note, out of the 300 companiesmeasured by iSuppli, 20 percent were able to grow their revenue by double-digitpercentages and 12 companies were able to expand by more than 50 percent duringthe year. 

In addition to MediaTek, five other companiesmade notable advances up the rankings of the top 25. Qualcomm and Hynix bothmoved up two positions, to No. 6 and No. 7, respectively.  Micron moved upthree places to No. 13 and Elpida Memory jumped up four places to No. 15. Freescale Semiconductor dropped four places down to No. 17 and RenesasTechnology, Sony, and Panasonic Corp. all fell three places. It should be notedthat when the merger of Renesas Technology and NEC Electronics is completed,the combined company would be ranked at No. 5 with combined revenues of morethan $9.5 billion.

The hardest hit companies among the Top 25suppliers were Sony Corp. and Freescale Semiconductor Inc. with revenuedeclining by more than 30 percent during the year. Sony suffered from itsstruggles in the consumer electronics market while Freescale’s revenue was hitby its exit from the mobile handset market. 

Six other companies among the Top 25 sawtheir revenues drop by more than 20 percent: Renesas Technology, InfineonTechnologies, NEC Electronics, Panasonic Corporation, NXP and ROHMSemiconductor. It should be noted that Infineon’s revenue was impacted by itsspinoff of Lantiq. The combined revenues of Infineon and Lantiq fell by lessthan 17 percent.

A total of 12 major semiconductor segmentssaw revenues decline by more than 20 percent in 2009. The hardest-hit segmentswere laser diodes, Charge-Coupled Devices (CCDs), ASICs, NOR flash memory andSRAM, all with declines of more than 25 percent. Among the major semiconductormarket segments of memory, microcomponents, logic Integrated Circuits (ICs),analog ICs, discretes, optical and sensors, it was analog ICs that saw thebiggest drop in 2009 with revenue falling by 16.9 percent.

Sales of semiconductors into the wirelesscommunications and data processing markets suffered the smallest declines in2009 with decreases of 7.0 percent and 8.6 percent, respectively. Thehardest-hit market was automotive electronics, where semiconductor sales fellby 23.8 percent in 2009.