Consumers are firmly positioned in the driver's seat when it comes to worldwide semiconductor sales -- and that's a negative in the current economic environment.

“The current global economic turmoil is clearly having a significant impact on semiconductor sales,” said George Scalise, president of the SIA (Semiconductor Industry Association), in a statement. “The fortunes of the semiconductor industry are increasingly tied to consumer spending on electronic products. Consumer purchases now drive well over half of worldwide semiconductor sales.”

On lower consumer spending brought about by the financial crisis, the SIA projected the first decline in sales since 2001 in its annual forecast of global semiconductor sales today.

Sales in the current quarter -- historically a strong quarter for the microelectronics industry -- are forecasted to decline by 5.9% from the prior quarter, according to SIA data. ISuppli has also projected a Q4 decline.

The SIA forecast projects 2008 sales of $261.2 billion, a 2.2% increase from 2007 sales of $255.6 billion. That estimate is in line with growth estimates made by Gartner Inc.

SIA further projected that 2009 sales will decline by 5.6% to $246.7 billion. In doing so, SIA cited a recent Deutsche Bank report which estimates PC unit sales will decline by 5% and cell phone unit sales will decline by 6.4% in 2009, with declining sales across all geographic regions. PCs and cell phones together account for approximately 60% of worldwide semiconductor consumption, SIA pointed out, noting that any significant decline in these two important market segments will have a negative impact on semiconductor sales.

“The September sales figures provided the first sign of a slowdown in semiconductor sales,” Scalise said. “Indications are that both consumer and corporate spending on technology will decline in 2009. Visibility is very limited, and much will depend on how quickly public policy makers can act to restore consumer confidence.”

The SIA pointed out that the semiconductor industry has enjoyed six years of uninterrupted growth since dot.com collapse in 2001. “There are few similarities between 2001 and the current conditions,” Scalise continued. “The collapse of semiconductor sales in 2001 was driven primarily by the implosion of ‘dot.com’ industries which resulted in an enormous inventory overhang. Excess inventory is not an issue today, and the industry is well positioned to resume growth quickly once the current worldwide economic uncertainty subsides."

Growth will return in 2010 and continue in 2011, the SIA said. Sales will grow by 7.4% in 2010 to $264.9 billion and by 7.5% in 2011 to $284.7 billion, according to the group's data.

By: DocMemory
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