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Databeans: IC rebound coming soon

Posted: 22 Apr 2009 ?? ?Print Version ?Bookmark and Share

Keywords:IC recovery? 2001 downturn? semiconductor forecast?

The effects of the ongoing chip industry downturn will be shorter lived than the downturn of 2001, when it took three years for revenues to return to 2000 levels, according to a market research forecast.

Databeans Inc. predicted a "v-shaped" recovery for semiconductors, with revenues rising 17 percent in 2010 after falling 17 percent this year. Chip industry revenue in 2009 will be just over $200 billion, roughly the size of the market in 2000, the firm said.

But the primary difference between the current downturn and 2001when industry revenue contracted by 32.5 percentis the unprecedented growth in chips that occurred in 1999 and 2000, Databeans said. This growth caused such overcompensation in production that the following recovery followed a "bathtub effect" a long and flat stabilization to return to previous profits, the firm said.

By contrast, the current crisis caused primarily by temporary macroeconomic issues will recuperate at a much faster rate, Databeans said. The firm's forecast is consistent with some other chip industry market research firms, who have noted that many semiconductor companies were actually cutting back on capital expenditures in the years leading up to 2008.

By 2011, total IC sales will regain momentum and surpass the peak seen during 2007, with $269.1 billion in revenue, according to Databeans' forecast. At least one prominent market watcher, Gartner Inc., has predicted that chip industry revenue won't return to 2008 levels until 2013.

"We believe that the market reacted swiftly to the financial meltdown and that with little inventory in the channel now, production will begin to flow again and not remain stagnant as it did in 2002," Databeans said in a statement.

Databeans said a chip industry recovery may be sooner than expected, pointing to indicators such as the slowing decline in mobile handset sales and a recent improvement in China's industrial output growth.

"Ultimately, a combination of factors will lead to a gradual recovery in both pricing for ICs and consumer spending habits," Databeans said. "This year will still be a difficult journey for many OEMs and semiconductor suppliers, with consolidation, reduction, or restructuring on the horizon. Ultimately, Databeans views the situation as troubled, but still showing signs of improvement."

Databeans said meager replacement rates for typically strong application categories such as mobile handsets, notebook PCs and consumer electronics, spurred by panic in the credit sector which has hindered consumer spending, is responsible for the current slowdown in demand for chips.

- Dylan McGrath
EE Times

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