The global chip industry is expected to see low sales this year as the demand for PCs, mobile phones and other semiconductor products has gone down amidst financial crisis.
The Semiconductor Industry Association (SIA) has predicted slump in the sales of semiconductor for 2009, putting a halt on seven-year (since 2001) boom that took the chip industry to a new height, as reported by wallstreetjournal.
The Association said that the global chip sales are expected to decline 5.6% to $246.7 Billion this year. Sales grew strongly in the first three quarters of 2008, but the fourth quarter witnessed a drop, according to the Association. Moreover, the Association believes that after posting low sales in 2009, the chip industry would increase 7.4% and 7.5% in 2010 and 2011 respectively.
The low sales forecast of the global semiconductor industry is based on the impact of the global financial crisis that has severely dented the consumer confidence, which, in turn, reduced the demand for PCs and gadgets. As both PC and mobile phone sales account for 60% of the total chip sales, the fall in demand of these products will prove significant for chip industry.
In the wake of weak demand, investors are reducing their share in broad range of chip and chip equipment manufacturers. It is clearly visible that consumer demand will play a critical role in the decline this year. Thus, restoration of consumer confidence could help in recovering the losses incurred.
In addition, this will be the first decline in chip industry sales after 2001 when dot-com bust pushed the market into slowdown because of large inventories, but the forecasted slump is not based on full inventories. Actually, the industry sales mainly declined due to the ongoing financial crisis and consumers’ unwillingness to spend on semiconductors.
“The impact of the current financial crisis is evident on the global chip industry as the demand for PCs, mobile phones and other semiconductor products is declining. Now the sales depend on the customer spending, which has gone down significantly with the worsening of financial crisis. Thus, declining sales will lead to a slowdown in growth of the chip industry”, said a Research Analyst at RNCOS.
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