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Semiconductors to plummet in line with PC and handset falls in 2009

At the end of last week we just missed putting in our previous issue the latest Semiconductor Industry Association (SIA) annual forecast

At the end of last week we just missed putting in our previous issue the latest Semiconductor Industry Association (SIA) annual forecast. The organization says this is going to be the first backward step in semiconductors since 2001 and reckons that there will be a 5.9% fall from the immediately prior quarter, in a part of the year which is usually seasonally strong.

For the entire year the SIA projects a fall of 5.6% to $246.7 billion and says growth will resume growth in 2010 when revenues will rise by 7.4%, more than countering the fall.

“The current global economic turmoil is clearly having a significant impact on semiconductor sales,” said SIA President George Scalise. “The fortunes of the semiconductor industry are increasingly tied to consumer spending on electronic products. Consumer purchases now drive well over half of worldwide semiconductor sales.”

These calculations are driven by falls which the SIA expects in demand for handsets (down 6.4%) and PCs (down 5%) throughout 2009 (see diagram below). The SIA takes these numbers from work carried out by Deutsche Bank. Between them these two segments take up some 58% of global semiconductor usage. The SIA also predicts that Flash Memory by revenue will grow only 3.5% annually from 2008 until 2011. The biggest areas of growth are in opto-electronic chips, which is says will continue to rise by 8% annual until 2011.

The SIA noted that semiconductor sales were strong right into the third quarter but the September sales figures provided the first sign of a slowdown and indications are that both consumer and corporate spending on technology will decline in 2009. It says that at this stage visibility is very limited, which means that it really just doesn’t know for sure.

“The semiconductor industry has enjoyed six years of uninterrupted growth since collapse in 2001,” said a statement, “There are few similarities between 2001 and the current conditions,” Scalise continued. “The collapse of semiconductor sales in 2001 was driven primarily by the implosion of ‘’ industries which resulted in an enormous inventory overhang. Excess inventory is not an issue today, and the industry is well positioned to resume growth quickly once the current worldwide economic uncertainty subsides,” Scalise concluded.

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