STAMFORD, CT – Electronic equipment markets should begin a recovery in the fourth quarter of 2009, enabling the electronics industry to enter into a sustained recovery in the second half of 2010, with a reacceleration in sales in 2011, according to Gartner Inc.

"Almost all sectors of the electronic equipment market are still declining, and we will need to see markets hit bottom before we see the waves of recovery and a rebound to positive growth," said Klaus Rinnen, managing vice president at Gartner's semiconductor manufacturing group. "The wider process of rebounding will occur over a period of approximately two years."

Although the PC market is already reaching the bottom of its growth pattern, Rinnen said the majority of electronics segments would not reach bottom until the second half of 2009. He suggested a possibility of a W-shaped recovery pattern that, while less likely, could push sustainable growth into 2011.

"Although there are signs that the market will improve over the next few years, we do not expect semiconductor sales to regain the 2007 peak sales levels during the current five-year forecast period, ending in 2013," said Jim Tully, vice president and analyst at Gartner.

It is anticipated PCs and cellphones will be among the lead segments to bottom out and start the charge for the recovery. However, Gartner warned that although improvement in electronics inventories, in combination with government stimulus, will likely put a halt to the current slide in the market, the question is one of timing between these two events.

If economic growth and government stimulus are slow to materialize, the industry could see a demand and production lift, followed by a languishing demand period, and even a risk of overproduction in mid-2009. Such events could not only delay the bottoming of segments, but also force a second and lower bottom for the PC market, the firm says.

Gartner does not expect the onset of a sustainable recovery to set in before the second quarter of 2010. Cellphones are projected to be the first market to achieve a sustainable recovery, edging PCs by about one quarter. For the industry as a whole, sustainable recovery will take longer as higher-priced and highly consumer-dependent segments are delayed.

Analysts at the firm said awareness of risk is a must for industry players to maximize opportunities. In the near term, careful attention must be given to the expected recovery pattern of each sector, and a response must be planned, as those vendors with the most credible response to these patterns will be the ones that emerge from the downturn as winners.