Warning of processor decline despite growth

Research from IDC suggests that despite growing microprocessor sales, change is ahead

Trouble ahead: Sequential decline expected in 2008

Market research firm IDC has claimed that PC microprocessor sales have hit record levels in the
latest quarter.

However, it tempered this good news with a warning that the next quarter could see an equally
dramatic downturn, resulting from the perceived recession and subsequent credit crunch. It warned systems integrators and assemblers to consider getting into other markets or prepare for lower profit levels.
A period of price stability in the microprocessor market has induced a growth spurt for this sector in the latest quarter, said IDC.

Worldwide PC microprocessor shipments grew 8.5 per cent sequentially in the fourth calendar quarter of 2007 to reach record levels for the second quarter in a row.
Overall shipments and stable average selling prices stimulated market revenue to grow 9.6 per cent sequentially to $8.7bn (£4.4bn).

It was the PC server market, however, that stood out. Shipments of processors for these products grew 17 per cent. In comparison, the mobile sector showed slow growth, with shipments of processors for mobile PCs improving by only 10.3 per cent. Desktop PCs were worse, with growth falling to 6.5 per cent.

“Overall market pricing was very stable in the quarter,” said Shane Rau, director of semiconductors, personal computing research at IDC. “Since server and mobile processors carry a premium over desktop processors and grew more, they buoyed the market average price.”

However, Rau warned the market to expect a stronger sequential decline in the first quarter of 2008, citing worries that the economic climate would affect corporate and consumer purchases.
But Richard Murphy, IDC inquiry analyst, added: “Mobile processors will go on a double-digit growth track for the year and surpass desktop processors in 2009.”