PC Semiconductor Decline Not Over Yet, But Will End in 2002, Says IDC

MOUTAIN VIEW, CA – APRIL 15, 2002 – The PC semiconductor revenue decline that began in late 2000 will end in 2002, according to a new report issued by IDC. Although recovery will begin to show in the second half of 2002, the path will be bumpy.


IDC forecasts revenues in the total worldwide PC semiconductor market will rise from $36.3 billion in 2001 to $37.6 billion in 2002 — a modest rise of about 3.4%. The desktop PC semiconductor part of the market will rise from $28.1 billion to $29.1 billion, or by approximately 3.9%. Mobile PC semiconductor revenue will rise by approximately 1.6%, from $8.3 billion to $8.4 billion.

"Through all of 2001, PC chip suppliers struggled with a collapse in demand, extended oversupply, and dramatic price wars. The result was a record 35.7% decline in total desktop and mobile PC semiconductor revenue," said Shane Rau, senior analyst for IDC's Semiconductor: Desktop and Mobile PCs Research program. "While we predict that revenue will be slightly positive this year, the conditions that led to the decline persist in pockets around the industry and will depress overall revenue for at least the first half of this year."

The return of notable revenue growth will not happen until 2003, when IDC predicts that total revenues will grow at healthy pace, driven by a strong PC replacement cycle. In the long run, however, growth will not surge like it did in 1999 and 2000. In fact, a return to the record revenue levels of 2000 is at least another 5 years off.

In terms of semiconductor components, worldwide x86 desktop and mobile PC microprocessor revenue will set the tone of the year with modest growth of 3.8%, ending at $23.4 billion. PC DRAM revenues, disastrous in 2001, will grow by 15.9% to $5.7 billion. One very notable area of growth will be in the revenues of core logic chipsets that integrate graphics controllers, growing by almost 36%, to nearly $2.4 billion. This growth explains why companies like NVIDIA and ATI are leveraging their graphics technology as they enter the chipset market.

IDC recently published the Worldwide Desktop and Mobile PC Semiconductor Market Review and Forecast, 2001-2006 (IDC #W26731). This report forecasts desktop and mobile PC semiconductor revenues in the worldwide market, segmented by price band and components. Bill-of-materials forecast and technology trends are also included in this report by price band and form factor. Major competitive trends impacting the market are also analyzed. To purchase this report, contact Jim Nagle at 1-800-343-4952, extension 4549 or at jnagle@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in- depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com. IDC is a division of IDG, the world's leading IT media, research and exposition company.

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