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U.S. recession could drag IC industry, analyst warns

Posted: 14 Nov 2007 ?? ?Print Version ?Bookmark and Share

Keywords:U.S. recession? IC industry? chip vendor?

Gartner Inc. analyst Klaus Rinnen warned that a potential recession in the United States could spell trouble for the IC industry.

In a newsletter, Rinnen said that U.S. government economists and financial counselors are tipping of a possible recession due to subprime mortgage debt and the tightening of credit.

"Based on a rising probability, we ask the hypothetical question: If the U.S. enters a recession during the next six months, what would be the impact on the semiconductor industry? We believe the semiconductor industry would fall into a demand-driven downturn in 2008," he said.

Rinnen said that if a recession were to hit the United States in 2008, the IC industry could go through a demand-driven downcycle that can even extend into 2009. "The severity of this cycle could depend on the depth and speed of a U.S. recovery as well as the extent of collateral damage, if any, to other economies around the globe," he said.

Should the recession hit the United States, Rinnen said that IC equipment companies are most at risk, while chip companies would be less affected. He added that equipment companies' revenues during a mild recession could fall around 15 to 20 percent in 2008, while chip vendors may only see single-digit drop.

- Mark LaPedus
EE Times

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