ICs and other semiconductors will bounce back in 2010
Chip industry will have a relatively quick recovery from the downturn
By Jim Carbone -- Purchasing, 4/29/2009 3:24:00 PM EDT
The semiconductor industry will decline 17% to just over $200 billion, but there will be a “boomerang” recovery in 2010 and industry revenue will grow to $269.1 billion in 2011, according to researcher Databeans.
The researcher says the current industry downturn will be different than the one in 2001, when chip sales sank 32.5%. Leading up to that downturn, there was unprecedented semiconductor revenue growth that occurred in 1999-2000, which resulted in overproduction and high inventory levels. The current downturn will be shorter lived because in most cases there wasn’t overproduction and a big inventory buildup. When demand for new electronics equipment picks up it will spur demand and production of semiconductors.
Databeans says certain indicators show that recovery may be sooner than expected. The handset industry is a traditional bellwether for overall semiconductor health, according to the researcher. The rate of decline in handset sales is dropping and sales of certain types of cell phones such as smartphones are strong.
China will play an important role in the semiconductor industry recovery and it is responsible for a growing share of electronics production and consumption. China's industrial output growth jumped 8.3% in March, up from the 3.8% increase in January and February as domestic demand is growing, says the researcher.
Also see: Integrated circuit demand, prices to rise in second half
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