Semiconductor revenue down as economy slows

Earnings to fall as PC and consumer electonics demand lessens

Global semiconductor revenue is expected to fall this year as demand for PCs and consumer electronics slows down, with the trend continuing to affect chip makers next year, analyst firm iSuppli says.

Consumer confidence has faded because of the global financial crisis, which has led to restrained spending on products like consumer electronics and PCs, says Dale Ford, senior vice president at iSuppli. Slowing orders for semiconductors used in those products have in turn impacted chip makers.

"We are expecting a continued contraction in 2009," Ford says, adding that conditions for the semiconductor market could improve by the end of 2009 as economies stabilise.

Semiconductor revenue worldwide is expected to be US$266 billion (NZ$493 billion) for 2008, a 2% drop from 2007, iSuppli says in a recent study.

2008 is being darkened by a steep drop in memory revenue, says Ford. Memory chips are flooding the market, driving down prices and revenues for their makers. Samsung, Toshiba and Micron Technology are all expected to report semiconductor revenue drops for 2008.

Intel placed first in global semiconductor revenue in iSuppli's study, with US$34.14 billion in revenue for 2008, only 0.4% above compared to 2007. Samsung was second, with revenue of US$17.89 billion, a 9.1% decline. Texas Instruments was third, with US$11.5 billion in semiconductor revenue, a 6.3% decline, followed by Toshiba, with a revenue fall of 5.9% to US$11.46 billion in 2008.

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