John Paczkowski

Recent Posts by John Paczkowski

Chips Dip

As bad as predictions are for global IT spending during the next year, they’re not nearly as bad as what the industry experienced between 2001 and 2003. So when the Semiconductor Industry Association says worldwide sales of semiconductors declined more steeply in November than in October, well, we’ve seen worse, right? Global chip sales fell 9.8 percent to $20.8 billion in November, from $23.1 billion a year earlier, according to the latest SIA stats. That’s 7.2 percent lower than the $22.4 billion reported for October.

Clearly, the slowdown in the U.S. economy has reduced demand for electronics goods and, by extension, the chips on which they run. Said SIA president George Scalise, “The worldwide economic crisis is having an impact on demand for semiconductors, but to a lesser degree than some other major industry sectors.”

Right now, anyway. According to Gartner (IT), chipmakers haven’t yet seen the worst of this downturn. “In the last quarter of 2008, market conditions deteriorated significantly, and as the fourth quarter has progressed, many vendors have issued updated guidance for the quarter, reflecting weakening market conditions,” commented Gartner analyst Andrew Norwood. “Unfortunately for vendors, 2009 is going to be considerably worse. Some have compared the precipitous decline in semiconductor demand to that of the 2001 ‘dot-com’ bubble. However, unlike 2001, this economic downturn is much more broad-based and not limited primarily to the technology sector.”