Intel, economy hit struggling AMD with one-two punch

About a week ago, Richard Gordon, an analyst at Gartner, said that the global semiconductor industry is in a slowdown that he doesn't see ending anytime soon.

Worldwide semiconductor revenue was up just 3.8 per cent in 2007 over the previous year, according to a report from Gartner. For an industry that's accustomed to double-digit growth, last year's rise was noticeably slight. However, it's something the industry may have to get used to, said Gordon.

"The high growth of the late '90s seems to be in the past now," he said in an earlier interview. "I don't see anything on the horizon that will fuel growth in the near future. We're talking about long-term -- about forever."

McGregor said he doesn't think the chip industry is in as much trouble as Gartner predicts, despite AMD's continued problems. He noted that there are a lot of popular devices on the market and enough interest in them to continue to drive the processor industry.

"Yes, there will be slowdowns, but growth for electronics still looks very positive," he added. "Growing at double digit rates isn't easy anymore, but you're still looking at a lot of apps and new markets. You're still looking at growth."

Dan Olds, an analyst with Gabriel Consulting Group, said he has more concerns about AMD in particular than about the chip industry as a whole.

"I've lost a bit of faith in AMD," he said. "I was a huge fan when they came out with Opteron. I'm just wondering now if they can get back on track and execute. That remains to be seen.... If they can get their product out the door, on time, with the performance that gets them back to leadership in the market, they could still be OK this year. The hard part is that they have to beat Intel at the game or they're going to be relegated to being the lower-performance, lower-price second choice."

King, though, doesn't see much good news coming this year simply because the economy is slowing down. "Frankly, I think there's probably more bad news coming on the greater economy," he said. "I would expect that to continue through the rest of 2008, if not further. The big question is if the softer economy will have [an effect] on business IT purchasing decisions. That's what everyone is holding their breath on. There could be worse news coming down the line, and not just for AMD."