Semi Market Preps For 2011 Slowdown

The semiconductor industry, which saw phenomenal growth in 2010, is gearing up for a solid if less spectacular 2011.
By James Rogers ,

NEW YORK (

TheStreet

) -- The semiconductor industry, which experienced phenomenal growth in 2010, is gearing up for a solid if less spectacular 2011, according to analysts, as companies such as

SanDisk

(SNDK)

and

Intel

(INTC) - Get Report

attempt to tap the next stage of the mobile revolution.

Tech research firm Gartner estimates that worldwide semi revenue is on pace to grow 31.5% this year, surpassing the $300 billion mark for the first time in the industry's history. After

working through their inventories in 2008 and 2009

, semi companies ramped up their sales in 2010, although Gartner expects much slower growth next year.

Gartner predicts that the semi market will grow 4.6% in 2011, reaching $314 billion, but expects that smartphones, mobile PCs and tablets will fuel growth through 2014.

"Media tablets are seeing rapid growth due to the success of the

Apple

(AAPL) - Get Report

iPad, and the market will continue to see strong growth with greater competition in this space," explained Gartner in a statement.

Semi revenue from media tablets, which are used primarily for viewing content as opposed to performing PC tasks, will grow from $2.4 billion in 2010 to $17.8 billion in 2014, according to the research firm.

Flash memory maker SanDisk is

seen as a major beneficiary of this trend

, and outgoing CEO Eli Harari recently highlighted the

potential for low-cost tablets in emerging markets

such as India.

SanDisk, which provides Flash for Apple, has become something of a Wall Street darling and continues to bask in the success of devices such as the iPad. The company's shares have climbed more than 70% this year, and the firm recently blew past

analysts' third-quarter estimates

.

Gartner also expects smartphones to provide another boost to the semi sector in 2011, growing 13.6% to bring in revenue of $55.4 billion.

Chip giant Intel will be looking

to grab a slice of this market during the coming months.

Despite being relatively late to the smartphone space, where it faces stiff competition from

Qualcomm

(QCOM) - Get Report

, Intel is preparing to launch its Medfield smartphone chip next year. "We will see smartphones from premier brand vendors in the second half of 2011 with Intel silicon inside of them," explained Intel CEO Paul Otellini, at the Barclays Capital Global Technology conference, earlier this week.

Gartner rival

IDC

also released its own predictions for the worldwide semi market this week, forecasting revenue growth of 9% in 2011 to reach $303 billion. IDC, however, expects the semi sector to experience a compound annual growth rate of 6% between 2010 and 2015, reaching $380 billion.

--Written by James Rogers in New York.

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