The semiconductor market is showing recovery in the midst of economic uncertainty, with global semiconductor revenue expected to bounce back to same level as 2008 at $255 billion despite an 11.4 percent decline in 2009 to $226 billion, Gartner said on Monday.

The semiconductor market, which saw close to 17 percent growth in the second quarter of 2009 and almost 20 percent growth of the third, was given projections for the fourth-quarter stronger than seasonal norm.

The latest outlook of 11.4 percent annual decrease is also better than the third quarter projections when Gartner forecast semiconductor revenue to decline 17 percent in 2009.

According to Gartner, inventory replenishment, government stimulus packages especially in China and outstanding price elasticity on consumer products clearly helped drive this strong recovery.

PCs are the single largest application driving the semiconductor rebound as PC unit growth projections dramatically improved from double-digit declines at the start of 2009 to the current low-single-digit positive outlook.  This strong PC recovery has made microprocessors and DRAM two of the most-noteworthy device categories of 2009.

This strong PC recovery has made microprocessors and DRAM two of the most-noteworthy device categories of 2009.

Both device types experienced lower revenue declines than the industry average, and DRAM began to be profitable for some vendors in the third quarter of 2009 after almost three years of losses,  said Bryan Lewis, research vice president at Gartner.

According to Lewis, the most significant changes for the semiconductor industry came from application-specific standard products (ASSPs), memory and compute microprocessors, as all three products benefited from a strengthening PC market.

 ASSPs and memory, primarily NAND flash, also benefited from an improved outlook for cell phones, Lewis said.

The revenue forecast for the commodity memory market - DRAM and NAND flash - has improved because of the stronger demand outlook, which means that pricing has strengthened more than previously forecast, He added.

While most of the news has been positive to date, Lewis also noted that recent channel checks in Taiwan indicate there is concern that PC orders are slowing earlier than the seasonal norm and that 2010 may get off to a slow start.