In this down cycle, semiconductor manufacturers are seeing dropping profits and reduced revenue that could lead to consolidation, Middleton said. He declined to name particular companies that may be up for grabs, but said larger players could gobble up smaller players. An acquisition is a key strategy that helps buyers acquire customers and intellectual property from erstwhile competitors, while also reducing competition in the space.

Chip makers are also cutting back on capacity in fabrication plants to adapt to the reduced demand during the recession.

Gartner also said in a study released Wednesday that Intel recorded the top semiconductor revenue during 2008, followed by Samsung, Toshiba and Texas Instruments (TI).

Intel's semiconductor revenue for 2008 was $33.8 billion, a 13.3 percent market share, but a 0.5 percent decline from the previous year. Samsung saw a massive 15 percent year-over-year decline to US$17.4 billion. Toshiba and TI were a close third and fourth, seeing their revenue drop 10.3 percent and 10 percent, respectively.

Companies like Elpida did relatively better, showing only slight decline because of a stronger DRAM supply chain than the larger companies, Middleton said.