Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Grim Forecasts For Chips And IT Spend In 2009

Posted by Tom Foremski - February 25, 2009

2009 global chip sales could plunge by as much as one-third in 2009 says market research firm Gartner.

Mark LaPedus at EETimes reports:

Worldwide semiconductor revenue is forecast to reach $194.5 billion in 2009, a 24.1 percent decline from 2008 revenue. Market research firm Gartner also warned that its ''negative scenario'' could reach a 33 percent decline in 2009.

The chip industry is expected to start growing in 2010 but even with three years of growth, 2012 revenue will still be below 2009 revenues.

Worldwide IC revenue is expected to fall by at least 17 percent sequentially in the first quarter of 2009. There is a strong possibility that the first quarter of 2009 could be worse, and if the market continues with moderate declines in the second and third quarters of 2009, the industry could face a record annual decline.

EETimes.com - Gartner cuts IC forecast, sees 24% drop

The decline Information Technology (IT) markets will be relatively modest compared with the chip market. IDC expects growth of 0.5 per cent in global markets. Hardest hit will be hardware spending on servers, printers and PCs, which are expected to drop 3.6 per cent in 2009. Software and services are forecast to grow 3.4 per cent.

IDC also said that global server sales plunged 14 per cent in Q4 2009 compared with the year ago period. This also marked the first time sales were lower in all three server sectors: volume, midrange, and high-end.

Tech Trader Daily - Barron’s Online : Global 2009 IT Spending Will Barely Grow, IDC Says

Foremski's Take:

Lower chip and hardware sales will affect Silicon Valley companies such as Intel, Hewlett-Packard, and Sun. Spending on software and services will benefit IBM, the world's largest computer services company.

Although the chip industry will be down significantly this year, chip companies are used to a four year cycle of boom and bust. It is in the bust part of the cycle that chipmakers such as Intel (Intel is an SVW sponsor) invest in building chip fabs so that they are ready for the next boom period. Intel recently said it would invest $7 billion new manufacturing facilities in the US over the next two years.

Intel to invest $7 billion in U.S. facilities - MarketWatch

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