LAS VEGAS -- US shipments of consumer electronics will be flat at $171 billion in 2009, according to the semiannual industry forecast released by the Consumer Electronics Association.

“The CE industry is resilient but not immune from the business cycle," CEA president and CEO Gary Shapiro said. “Innovation will kick-start the economy."

Consumer electronics 2008 shipment revenues hit new high of $172 billion, up 5.4% over 2007. In 2009, CEA projects domestic shipment revenues will essentially remain flat at $171 billion, down 0.6% year-on-year.

The primary revenue driver for the industry continues to be digital TV displays, representing 15% of total shipment dollars. As the transition to digital television nears, unit shipments of DTVs will approach 35 million in 2009, an increase of nearly 6% over 2008. LCD displays remain the top choice among consumers, representing 77% of total DTV units.

With the format war now settled, Blu-ray players are expected to see major growth in 2009. With more content, new products and lower prices, Blu-Ray revenues are projected to surpass $1.2 billion. The gaming category also remains a bright spot in the CE industry and an increasing component of consumer spending.

The overall video game market should grow 11%, generating nearly $22 billion in revenue this year, a new high mark for the category. Software continues to drive the segment, making up $15 billion of the overall sales.

Smartphone revenues will continue to grow this year, increasing nearly 20% this year, to $13.6 billion. As carriers increase the speed of their networks and offer new services in addition to communication, smartphones will account for more than 60% of total handset revenues.

TAIPEI, TAIWAN – Compal Electronics reported consolidated revenues for 2008 fell 3% to NT$427.68 billion (US$12.88 billion). Despite the drop, notebook shipments climbed 11% to 25.5 million units.
 
The company failed to realize its shipment and revenue goals in 2008. According to chairman Rock Hsu, expenses, inventory and cost were still acceptable, despite the setbacks.
 
Goals for 2009 include improving the gross margin and establishing an innovation center in Taiwan that will generate 200 to 300 R&D jobs. Compal has also set an ambitious objective of becoming the largest notebook maker. It expects notebook shipments to reach 32 million to 35 million this year.

EL SEGUNDO, CA – Global DRAM revenue will fall 19.8% year-over-year in 2008 to $25.2 billion, the second down year in a row, following a 7% drop in 2007, says iSuppli Corp.
 
Unfortunately, this decline won't mark an end to the memory sinkhole just yet. The troubled DRAM market is expected to suffer a revenue decline of 4% in 2009 as a result of global economic uncertainty.
 
“In the multibillion DRAM industry, many suppliers have engaged in massive spending programs in a bid to increase capacity and take market share from competitors,” said Nam Hyung Kim, director and chief analyst of memory ICs and storage for iSuppli Corp. “Using this strategy, DRAM makers hoped that their competitors would be forced to back out of the spending race and concede market share. However, in 2008, no one won this game of chicken, with players continuing their massive spending drive amid weakening demand, contributing to oversupply, price declines and a massive market downturn that is hurting all suppliers.”
 
The three-year decline contrasts sharply with market conditions in the mid 2000s, which delivered growth of 52.9% in 2004 and 35.2% in 2006, says the firm.
 
“The industry, which has been in decline for seven straight quarters, is in a state of emergency with massive layoffs and production cuts,” Kim observed. “The Top-8 DRAM suppliers have lost nearly $8 billion since 2007, and their total operating loss is expected to amount to $11 billion by the end of next year.”
 
After massive losses in 2001, the overall DRAM business had accumulated profits until 2006. At the same time, DRAM makers increased capital expenditures by more than threefold, rising to $21.1 billion in 2007, up from $7 billion in 2001. Since 2000, the DRAM industry has spent more than $100 billion, which is almost double the level of the Top-8 suppliers' combined market capitalization today, according to iSuppli.
 
“Three Taiwan-based DRAM suppliers – whose total market capitalization now is around $1.4 billion – have spent a total of more than $20 billion on capital expenditures since 2000, which represents an enormous over-investment during the period,” Kim said. “Furthermore, most capital expenditure money has been raised by issuing debt among many suppliers. The frozen credit market is punishing suppliers that need additional cash not for investment, but for their very survival.”
 
The industry's DRAM bit production growth rate didn't slow down, even with a 48% capital expenditure reduction this year, showing how much investment already was made,” Kim said. “This indicates an additional capital expenditure cut is inevitable in the near future.”
 
There are no winners among the DRAM suppliers, says iSuppli. The industry leader, Samsung Electronics, which has spent about $27 billion on DRAM manufacturing investments since 2000, holds the same DRAM market share this year as it did in 2000, at about 30%. The South Korean memory giant in the fourth quarter of 2008 likely lost money in its DRAM business amid oversupply and the global economic slowdown.
 
Four DRAM suppliers now are seeking government bailout packages: Powerchip, Promos, Nanya and Qimonda.
 
Hynix is close to finalizing an additional rescue package of $600 million from its creditor, KDB, according to a local Korean newspaper. The double whammy of over-investment and the global credit crunch clearly has impacted the industry badly, and the prices remain below variable costs for DRAM suppliers, says the research firm.
 
Despite unhealthy economic conditions and an unclear demand picture, iSuppli cautiously predicts the market will turn around in the second half of 2009 because of suppliers' rapid reduction in capacity growth. In the near-term, iSuppli believes prices will stabilize from the current level, and suppliers' losses will be reduced regardless of whether suppliers receive rescue packages from other parties.
 
“Until that time, the game of chicken has turned into a game of survival – a situation that will persist for months to come,” Kim said. 

Most of the laid off staff are full-time employees, although some contract workers will be cut as well.

TDK had 65,500 workers worldwide as of the end September quarter.