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Tech Industry

Chip market fell in '09, but growth expected in '10

Worldwide semiconductor sales dropped by more than 10 percent last year, Gartner says. But a rebound in the second half holds promise for 2010.

Like most tech sectors, the semiconductor industry had a rough start in 2009. But it improved as the year progressed and is eyeing a healthy recovery for 2010.

Chip revenue fell to $228.4 billion worldwide last year, a drop of 10.5 percent from 2008, according to Gartner's findings released Monday. That marked the first time the industry was hit with two annual sales declines in a row, according to Gartner. But with a rebound in the second half of 2009, semiconductor companies are eyeing a robust return to growth this year.

"After an unprecedented decline in the fourth quarter of 2008 and the first quarter of 2009, sequential quarterly revenue growth for the industry overall was very strong in the last three quarters of 2009," Peter Middleton, principal research analyst at Gartner, said in a statement. "As a result, 2009 performance overall was much milder than initially feared in the aftermath of the financial crisis."

Among all chipmakers for 2009, Intel continued to command the No. 1 spot for the 18th year in a row. Although its fiscal year sales dropped $1.6 billion, the company boosted its market share to 14.6 percent from 13.6 percent, said Gartner, due in large part to continued demand for portable PCs.

In second place, Samsung Electronics was one of the few semiconductor companies to see its revenue rise last year. Sales of Samsung's core DRAM and NAND flash memory products had dropped in 2008, prompting vendors to reduce supply. When demand shot back up in 2009, prices went up as well, boosting Samsung's overall revenue for the year.

Prior research from Gartner forecast a 20 percent jump in sales for the chip industry this year, while a recent report from iSuppli expects double-digit growth this year in spending on semiconductors.