Semiconductor outlook dismal

Semiconductor outlook dismal

Worldwide semiconductor revenue will fall 26 per cent this year to $US168.1 billion from last year's figure of $226 billion, according to a report released last week by analyst Gartner. Early reports from large semiconductor companies providing chips for PCs, storage and communications devices suggest that the second half of the year will be dismal for the industry, Gartner said.

Three factors which signal the poor state of the semi-conductor market are low component prices, weak demand for electronic system components and short device lead times. Any improvement in these factors could indicate an upturn in the industry, but the timing of this remains uncertain, Gartner said.

According to Gartner, overall semiconductor prices continued to decline in May and June, while prices for memory products remain under pressure.

Going into the third quarter, some areas of the market are showing positive signs. The US consumer products market is strong. But seasonal, end-of- year demand for PCs and mobile phones has not begun and there is too much unsold inventory in these categories, Gartner said.

There are some reports from the Asia-Pacific region that claim orders from US and European companies for motherboards, notebook PCs and even mobile phones are increasing, which could mean the market reached rock-bottom in the second quarter, Gartner said.

The world's three largest contract semiconductor manufacturers all posted weak financial results recently.

Turning signals for the industry

- Price stablilisation.

- Longer device lead times.

- Improved demand for memory products.

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