SIA forecasts chip sales slump for 2009

The Semiconductor Industry Association (SIA) has projected for 2009 the first decline in chip sales since 2001.

The forecast estimates 2008 sales will total $261.2bn, a 2.2 per cent increase from the 2007 total of $255.6bn. Sales in the current quarter, historically a strong quarter for the microelectronics industry, are forecasted to decline by 5.9 per cent from the third quarter. The SIA projected that 2009 sales will decline by 5.6 per cent to $246.7bn before resuming growth in 2010. Sales should grow by 7.4 per cent in 2010 to $264.9bn and by 7.5 per cent in 2011 to $284.7bn.

“The current global economic turmoil is clearly having a significant impact on semiconductor sales,” said SIA president George Scalise. “The fortunes of the semiconductor industry are increasingly tied to consumer spending on electronic products. Consumer purchases now drive well over half of worldwide semiconductor sales.”

The SIA cited a recent Deutsche Bank report which estimates personal computer unit sales will decline by 5 per cent and cell phone unit sales will decline by 6.4 per cent in 2009, with declining sales across all geographic regions. PCs and cell phones together account for approximately 60 per cent of worldwide semiconductor consumption, having a significant effect on chip sales.

According to the SIA, semiconductor sales remained strong through the first three quarters of 2008 despite growing evidence of a global economic slowdown and declining consumer confidence.

“The September sales figures provided the first sign of a slowdown in semiconductor sales,” Scalise continued. “Indications are that both consumer and corporate spending on technology will decline in 2009. Visibility is very limited, and much will depend on how quickly public policy makers can act to restore consumer confidence.”

The semiconductor industry has enjoyed six years of uninterrupted growth since the dot.com collapse in 2001.

“There are few similarities between 2001 and the current conditions,” Scalise continued. “The collapse of semiconductor sales in 2001 was driven primarily by the implosion of ‘dot.com’ industries which resulted in an enormous inventory overhang. Excess inventory is not an issue today, and the industry is well positioned to resume growth quickly once the current worldwide economic uncertainty subsides.”

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