Semiconductor industry sales to drop 16% in 2009

Research firm Gartner recently predicted global chip sales will drop 16% in 2009 as the semiconductor industry must prepare itself for even more abuse in the next year.

Last month, analysts predicted just a 2.2% drop in 2009, with chip makers continuing to announce reduced financial forecasts because of the struggling economy.  Suppliers must now either scale back current supplies, with smaller companies likely throwing in the towel and merging with larger companies to avoid bankruptcy.

"The financial crisis is having an unprecedented negative impact on fourth-quarter 2008 sales and profits," Gartner said in the report.  In the current quarter, chip sales are expected to drop 24 percent "surpassing the 20 percent decline record set in the second quarter of 2001."

The semiconductor industry was slammed with 32.5 percent revenue shortfall in 2001, but that followed two years of excellent growth in 1999 and 2000, with the years recording 22 percent and 34 percent growth.

Possibly the only brightside to the current DRAM slide is that executives are doing a better job managing the situation compared to 2001.  The market will also rebound better this time around than in 2001, because DRAM inventories are better controlled than seven years ago.

Many specialized industries in the PC market are faltering, as CPU and NAND flash makers also are expected to get tossed around due to the sluggish economy.