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Chip market to drop 28% in '09

Posted: 29 Jan 2009     Print Version  Bookmark and Share

Keywords:semiconductor market  declining sales  consumer sector 

According to Malcolm Penn, founder and principal analyst with market research firm Future Horizons Ltd, the global semiconductor market will plunge 28 per cent in 2009.

Although Penn has swung from being one of the most optimistic of semiconductor analysts to being one of the most pessimistic in terms of a percentage figure, his number still assumes the resumption of sequential growth in 2H 09 and Penn predicts a recovery in 2010. If the global economy enters a deflationary spiral or continues to decline for other reasons the semiconductor market could exhibit a double-dip and two years of declining sales, Penn said.

In any case Penn's 28 per cent would be an unprecedented fall. It is being driven by the high degree to which the semiconductor industry had become dependent on the strongly discretionary consumer sector and the extreme nature of the global economic malaise Penn said. "The speed of collapse in Q4 was unprecedented. It simply stopped dead," he said.

Penn calculated the overall 2009 figure by considering the level of sequential falls seen by companies in the fourth quarter of 2008 and their forecasts for Q1 09. Overall Penn sees Q4 as being 22 or 23 per cent down sequentially. "Some companies did worse and some companies did better," said Penn pointing to Nvidia with sales down 50 per cent in Q4 and Intel down 20 per cent in the same quarter.

"TI is giving guidance for Q1 of between 5 and 30 per cent. Basically they are saying they just don't know," said Penn. He said that Future Horizons' analysts had looked across numerous companies and reckoned Q1 could be down sequentially 20 per cent, with the following quarters growing 2, 12 and 3 per cent sequentially in the succeeding quarters. "That results in a 28 per cent fall and it all hinges on Q1. If Q1 is better than 20 per cent so will be the whole year. If Q1 is worse then the year will be worse; it could be 30 per cent, or more."

Penn's prediction is based on a relatively simple V-shaped dip in the semiconductor market. This would result in Q2 09 being the lowest point of the collapse with year on year sales 35 per cent down on where they were in Q2 08.

Further out Penn sees the market growing 15 per cent in 2010 followed by 28 per cent growth in 2011 followed by 18 per cent growth in 2012, although Penn admitted that the further out the predictions go the more vague they must become.

Only six months ago Penn was predicting that 2008 would provide the global semiconductor market with 10 per cent growth and that 2009 would provide stronger growth. Although Penn also qualified that by saying that if the global economy crashed it would take the semiconductor market along with it.

Penn now finds himself as the most pessimistic of a set of about 17 analysts. The others fall into two bands, Penn said. One set is predicting a fall in the 2009 semiconductor market of between 5 and 10 per cent and another set is predicting a fall of between 15 and 20 per cent. However this may be more to do with how recently they have published their latest prediction than any fundamental difference of opinion.

- Peter Clarke
EE Times Europe

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