STAMFORD, CT -- Worldwide semiconductor revenues dropped 5.4% to $255 billion in 2008, sunk by a severe fourth-quarter slump, a leading research firm said today.

"While sales held up fairly well in the first half of 2008, in the third quarter the industry started to soften as the economy slowed, and by the fourth quarter sales were deteriorating quickly, causing revenue growth to go into negative territory," said Peter Middleton, principal research analyst at Gartner Dataquest, which issued the report.

The industry should prepare for consolidation ahead, Middleton added. "With the market heavily impacted by the recession, we can expect considerable market consolidation going forward."

By market share, Intel was tops for the 17th consecutive year, with a 13.3% share. Samsung was No. 2 (6.8%), Toshiba and TI third (4.2%), and ST Microelectronics fifth (4%). STMicro was the only company in the top five to see revenues rise.

No. 8 Qualcomm saw sales jump 15.3%, the largest gainer among the Top 10, Gartner said.

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