For the first time, revenues for the semiconductor industry are expected to drop from year to year. The industry, which analysts first expected to grow in 2009, is now expected to nosedive for the next few years, beginning with a 16 percent drop from 2008 to 2009, according to Gartner.
Worldwide, the semiconductor industry is expected to drop to $219.2 billion in 2009 from 2008 revenues, which have reached $261.9 billion — a four percent drop from 2007.
Analysts say the turbulent economy is to blame for poor fourth-quarter sales and had a direct result on predictions for coming years.
The stiff drops are far from what analysts expected in mid-November when they predicted revenues would grow .2 percent this year and would not decline until 2009. The decline in 2009, although expected, was predicted at only 2.2 percent.
Different From 2001
“In the month of November, we were seeing the drop in semiconductor demand and it felt like it was falling off the cliff,” said Amy Leong, a Gartner research director. “People stopped ordering, and semiconductors had lower visibility.”
PCs, for example, had single-digit growth predictions for 2009, and now Leong sees PC sales falling five percent. Cell phones were expected to increase two percent and are now expected to drop 10 percent in 2009. Leong mentioned consumer spending and the automotive industry as factors in the decline.
“We are seeing a reduction in all products across the board, driving production down,” she said.
The number of layoffs and the economic downturn in the technology sector is leading businesses to compare this market period to the one experienced in 2001, but analysts say the two are very different.
“This downturn is broad-based, not limited to only technology; has a much different growth profile before the downturn; and has far less inventory buildup,” said Bryan Lewis, research…