Chip Makers Tighten Belts in 2009

In 2009, the semiconductor industry hit an all time low. With a big drop of over 11.4 percent in sales (roughly about 29 billion dollars) the semiconductor industry only made an income of 226 billion dollars in 2009, in total. This is further emphasized by the fact that sales had already gone down in 2008 (beginning during 2,008’s last quarter) and just continued to go down in 2009, steeping down most in its first quarter. These were observations made at Gartner by its semiconductor research director, Stephen Ohr.

With the unsure and weak economy, 2009 has seen the lowest sales in semiconductors globally. The last time this ever happened was in 1985.

However, there was a slight, but marked upward trend in 2009, especially during the end of its first quarter and continuing to rise in ever so slight degrees for the remainder of the year.

These were already expected by Gartner since the Morgan Stanley rating of the industry in semiconductors reduced down to a cautious rating as compared to its original attractive rating. But it did not just happen to Gartner, it also happened to Micron Technology as well as Nvidia and Intel Corporations.

Responding to the comment on the drop in ratings, Sanjay Devgan and Mark Lipacis (analysts at Morgan Stanley) stated that the drops were due to PC component sales concerns and the increase in inventories that happened shortly before.

But whose bad news is it really? Well, those who predicted otherwise and actually forecasted that the U.S. economy would be saved from its economic crisis by its booming market in semiconductors.

But things are starting to look up again for the semiconductor industry as, during 2009’s, third quarter, global sales in computer ships increased dramatically by 23 percent, which was a godsend after such drab sales in previous quarters. But overall, 2009 can be considered a bad year for the semiconductor industry, similar to how it was in 1985.

According to a Gabriel Consulting Group analyst, Dan Olds, the slump in semiconductor sales was interestingly not a general trend worldwide, since companies like Intel which only went down by 5.4 percent and the Samsung company showed sales that brought up revenues by 2.55 percent in 2009. Other companies were vying well in 2009 as Qualcomm displayed a growth of 0.4 percent, while Hynix Semiconductor showed an increase of 2.3 percent.

However, there were other semiconductor companies that went down as well like Renesas (drop by 19.9 percent) and STMicroelectronics who seemed to be following the leaders. And worse, were Infineon Technologies that decreased by 46.5 percent as well as Advanced Micro Devices, Inc. that took a dive with a 10.1 percent loss.

Overall, because of lower semiconductor sales, Intel and AMD were greatly affected as well when it came to servers and personal computer demands. But Gartner foresees the economy picking up again hopefully by 2010 when everyone in the economy is picking up the pieces and looking forward to a more productive and revenue filled year.