A report by market research firm Gartner suggests that the IT sector will have a higher consolidation rate than any other sector in this fiscal year.
According to the report, this will be because of the recent boost in the contract chip market - recently Globalfoundries announced expansion plans worth $9 billion and rival chip maker Taiwan Semiconductor Manufacturing (TSMC) has also announced a $4.6 billion expansion on their plant.
The report shows that these expansions are due to the forecasted increase in revenue for worldwide semiconductors in 2010 to $ 290billion - a 27.1 per cent hike on last year. Gartner's first quarter 2010 forecast projected worldwide semiconductor sales to grow 19.9 per cent.
Bryan Lewis, research vice president at Gartner, stated: "Sequential semiconductor growth has been very strong over the last five quarters, well above seasonal norms, and manufacturing capacity is tight."
He went on to say: "Chip revenue growth is clearly outpacing system revenue growth and that is a concern. Gartner's new semiconductor forecast has below-average growth in the second half of 2010 as we are anticipating a minor correction to realign semiconductor sales with electronic system sales. Even with this minor correction, we are still expecting very strong growth and record semiconductor sales in 2010."