"Diverging trends in key markets contributed to a moderate overall growth," said John Barber, research director at Gartner. "Slowing growth rates in traditional markets such as PC processors were offset by strong gains in DRAM and wireless communications."

Intel remained the No. 1 vendor, but it had a challenging year, experiencing a worldwide revenue decline of 12 percent. Until the fourth quarter of 2006, Intel lost share with its CPUs in the server and consumer segments to AMD. AMD executed with impressive gains in market share, including the mobile, desktop, and server product families in Dell. Revenues were further eroded by an across-the-board price war which impacted Intel the most.

However, late 2006 marked a turnaround for Intel, with the release of its Core 2 Duo and Xeon 5100 series products based on the Merom micro-architecture of dual-core, 65nm CPUs. Gartner analysts expect Intel to re-capture losses in market share in 2007 with their new product offerings.

Samsung Electronics, the No. 2 vendor based on 2006 worldwide semiconductor revenue, was led by increased sales in DRAM, NOR Flash, PSRAM and CMOS Image Sensors. Offsetting this strength, NAND Flash revenue, which contributed to 2005's revenue growth, declined for
Samsung as its market share fell below 50 percent in 2006.

Texas Instruments was supported by strong growth in both its analog and DSP products lines in 2006. While its analog growth overall was successful, it was driven by high performance analog, which grew 33 percent compared to 2005. 3G wireless products grew 50 percent in spite of an inventory correction in the Japanese market.

Driven by strong DRAM growth in 2006, Hynix and Infineon Technologies (including Qimonda) experienced the strongest growth rates among the top 10 vendors for worldwide semiconductor revenue.

In 2006 AMD acquired ATI to combine ATI's GPU expertise with AMD's processor platform. All of ATI's revenue is reflected within AMD, contributing to a major jump in market revenue for AMD in 2006. When comparing AMD and ATI combined results for 2005 against 2006, semiconductor revenues grew by just under 30 percent.

Additional information on specific market segments and devices is available in the Gartner report "Dataquest Insight: Semiconductor Revenue, Worldwide, 2006." The report provides results for the top 25 vendors in the worldwide market, as well as analysis on the top-tier vendors.