A sustainable recovery is about a year away, with sales growth expected to follow, according to a report out from Gartner Inc today. 

The research company said that electronic equipment markets should begin a recovery in Q4 of this year, allowing the electronics industry to enter into a sustained recovery — as measured by a rolling 12-month comparison with the prior year — in the second half of 2010 with a reacceleration in sales in 2011. That will not happen, however, until all electronics markets hit bottom.

"Almost all sectors of the electronic equipment market are still declining, and we will need to see markets hit bottom before we see the waves of recovery and a rebound to positive growth," said Klaus Rinnen, managing VP at Gartner's semiconductor manufacturing group, in a statement this morning. "The wider process of rebounding will occur over a period of approximately two years."

Rinnen said the PC market is already reaching the bottom of its growth pattern, but noted that the majority of electronics segments will not reach bottom until the second half of 2009. Until then, uncertainty will remain high and visibility low. Rinnen also warned that there is a less-likely possibility of a W-shaped recovery pattern — one with an up and down pattern — that could push sustainable growth into 2011.

"Although there are signs that the market will improve over the next few years, we do not expect semiconductor sales to regain the 2007 peak sales levels during the current five-year forecast period, ending in 2013," said Jim Tully, VP and distinguished analyst at Gartner, in the statement.

Gartner anticipated that PCs and mobile phones will be among the lead segments to bottom out and start the charge for the recovery. However, the company warned that although improvement in electronics inventories, in combination with government stimulus, will likely put a halt to the current slide in the market, the question is one of timing between these two events.

Gartner said that if economic growth and government stimulus are slow to materialize, the electronics industry could see a demand and production lift followed by a languishing demand period and even a risk of overproduction in mid-2009. "Such events could not only delay the bottoming of segments, but also force a second and lower bottom for the PC market," Gartner said.

Mobile phones are expected to be the first market to achieve a sustainable recovery, edging PCs by about one quarter, Gartner projected, adding that for the industry as a whole, sustainable recovery will take longer as higher-priced and highly consumer-dependent segments are delayed.

"The semiconductor industry must prepare itself for significant changes in consumer buying behavior, technology demand patterns and the supplier landscape," said Tully. "The current recession is pushing many suppliers to the brink of ruin, and several will not survive. The emerging supply chain will be leaner and stronger, but while it reshapes to the new market realities, industry participants are exposed to considerable vendor vulnerabilities."

By: DocMemory
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