Woe, Woe and Thrice Woe

Following Future Horizons' and Gartner's gloomy forecasts for the semiconductor market, iSuppli has piled in, and you've guessed it doesn't get any better. 

And it has also downgraded its 2008 forecast from a decline of two per cent to between three to four per cent following the downward revisions of revenue and profit forecasts by virtually every major semiconductor manufacturer.

"The deck appears to be stacked against the global semiconductor industry," says the company.

"The semiconductor industry's growth cycle is shaped by six primary, interrelated forces," observes Dale Ford, senior vice president for iSuppli. He lists global economic health, electronic equipment production, chip supply/demand balance, capital investment, industry and individual company profitability and competition.

"All six of these areas will present challenges for the semiconductor industry in 2009, but the global economic crisis is obviously the most significant factor pushing chip growth into sharply negative territory. Given our assessment of the current status of the key forces that shape the semiconductor cycle, iSuppli is predicting semiconductor revenues will decline by 9.4 per cent in 2009," says Ford.

He adds ominously, "However there is strong downward pressure on this forecast and there is a possibility that the market decline could be even worse than expected."

The nigh on 10 per cent decline means a second successive year of decline for the industry and would see revenues sink to $241.5bn from $266.6bn in 2008.

iSuppli has already forecast bloated semiconductor inventories and reckons these could balloon up to $10.2bn in value in the fourth quarter of 2008. That's the small matter of a 268 per cent increase from $3.8bn in the third quarter.

Where to turn for good news? Well, be patient. iSuppli cites the majority of predictions that the world's economies will start to recover in late 2009 or early 2010. If that works out then iSuppli reckons world semiconductor revenues could grow by 6.4 per cent in 2010 and 10.8 per cent in 2011.