SAN JOSE – Slowing demand for PCs and cellphones will stall the semiconductor industry recovery, a group of analysts predicted during SIA’s 2009 forecast Thursday.
The group of prognosticators asserted 2009 sales will be bleak relative to historical standards, with consolidation possible on the equipment side.
Among the bears was VLSI Research senior economist Aida Jebens, who forecasts a 6.9% drop in IC sales next year. “Growth will be flat, if not negative. Moreover, pricing pressure will flatten revenues even if unit shipments grow, she said.
VLSI’s price index shows ICs in “ really bad shape,” Jebens said.
Advanced Forecasting CEO Moshe Handelsman says worldwide IC revenues fell 2% in 2008, and predicts a larger decline for 2009.
Dale Ford, senior vice president, marketing intelligence at iSuppli Corp., says shipments will be down 4 to 5% for 2008 and will worsen next year. This deep decline should turn around in late 2009 to early 2010, he says, then rebound in 2010.
Calling 2009 a “year of austerity,” Infrastructure director of research Carl Johnson sees “unheard of declines” for components for PCs, which could be down 50% during the first half.
The analysts agreed inventories could become a problem in the coming year as OEMs pull back orders.
Slowing End DemandMost see slowing demand for electronics. VLSI predicts an overall drop of 2.6% year-over-year in 2009, with PC shipments growing 3 to 5%, but negative growth for cellphones.
SEMI, meanwhile, says the notoriously cyclical semiconductor equipment market will fall 21% in 2009, following 2008’s 28% year-over-year drop.
Bookings and sales could fall to 2003-03 levels, pegging the overall capital spending at $22 billion. Equipment represents 12% of device revenue, “an all-time low,” says Lara Chamness, senior market analyst, industry research and statistics.
IC and related manufacturing equipment will be down 24.7%, VLSI predicts. iSuppli’s Ford thinks PCs will show modest growth, while flat-screen LCDs will be flat.
The overall economy will grow, but sluggishly. Ford projects GDP growth of 2.2% in 2009, noting some foresee a decline.
Infrastructure’s Johnson predicts a “big shakeout” in the industry. “It will be survival of the fittest. The longevity of the business model is really important right now.”
Whether governments will intercede remains unknown, but is a potentially huge factor. “At some point for the semiconductor industry, the government will take on a role, but that role is a significant unknown right now,” says Ford. “And it won’t be the same role globally. We will deal with trade issues and run the risk of trade wars.”
“Wall Street will not be the solution,” he added. “That door has closed.”
But they agreed that with much of the foundry work now in Asia, the pressure will be on foreign governments, particularly in Asia, to make decisions on bailouts.
Semiconductors have a future in photovoltaics, one area that has seen outside investment, but that sector too will be tied to government subsidies. As Ford says, “As energy prices come down, there will be less willingness to invest in alternative energy solutions.” Johnson agrees, stating photovoltaics would be a longer-term play. “The reality is we’re sitting on the solar business; the tree will shake, and the semiconductor business has a role to play in this.”
