STAMFORD, CT -- The economic crisis is having a significant impact on the semiconductor industry, as worldwide semiconductor revenue growth in 2009 is expected to be 1%, down by approximately seven points from previous estimates, according to preliminary estimates from Gartner Inc.

In the third quarter, worldwide semiconductor revenue for 2009 was forecast to be $307.7 billion, a 7.8% increase from 2008. Gartner now expects worldwide semiconductor revenue in 2009 to total approximately $282 billion, a 1% increase.

Although semiconductor companies mostly met expectations for the third quarter (the semiconductor industry grew by approximately 5% quarter over quarter) guidance for the fourth quarter continues to drop. Gartner estimates worldwide semiconductor revenue in 2008 to total $279.4 billion, a 2% increase from 2007.

"Semiconductor growth was surprisingly strong until recently, given the very weak economic environment, but this will start to change in the fourth quarter of 2008," said Bryan Lewis, research vice president at Gartner. "Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009."

Gartner assesses the potential impact on semiconductor growth by checking the sensitivity of changing demand in key application markets. Gartner applied assumptions to reductions in system units and reductions in semiconductor content in systems. PCs and cellphones account for approximately a third of the total semiconductor market, so they are the biggest applications for adjusting growth. For example, if the system unit percentage change of PCs is lowered by 8%, this would impact semiconductor growth by 1.61%.

"In a recession, it's important to remember that there will not only be a potential reduction in the number of systems sold, but also a move to lower-cost systems with less semiconductor content," Lewis said.