LOS ALTOS, CA – Revenue from Industrial and Instrument electronics will fall 10% this year, despite the continuing strength of the medical market.

That’s according to new data from Henderson Ventures. The research firm says that while medical is “very stable,” other sub-segments, including semiconductor manufacturing equipment, are extremely volatile. Moreover, the sector tends to lag others. So despite data that show the segment dropped 1.1% on an annualized basis in February, the worst is yet to come.

On average, the I&I business is subject to less volatility than the overall electronics industry, Henderson says. And recent data show that the ongoing drop in output is far less severe than the overall world electronics equipment industry, falling from a recent annualized peak of $273 billion during the third quarter of 2008 to $251 billion in February, a drop of 5.3% on a 3/12 growth rate curve and 1.1% on a 12/12 basis.

But trouble looms, Henderson says. This year’s output will fall 10.4% worldwide, down from 1.3% a year ago. Semiconductor manufacturing equipment is expected to be his the worst, falling 43.8%.

The firm says the sector will rebound in 2010, with 4.3% growth that year followed by a 9.6% jump in 2011.