Heavy showers followed by periods of sunshine

The forecast for the semiconductor market is currently bleak, but it will brighten later, say analysts at Gartner Group.

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By  Matthew Southwell Published  August 1, 2001

The forecast for the semiconductor market is currently bleak, but it will brighten later, say analysts at Gartner Group. It points to the falling revenues of semiconductor companies, steady price declines and order backlog declines as evidence of the industry’s downturn.

“In the initial stages of the third quarter, many large electronic equipment system suppliers are facing the future with lower expectations than they had expressed at the beginning of the second quarter. Expected future semiconductor usage rates for the third quarter of 2001 are now lower than the normal seasonal expectations,” says Gartner.

“What we are seeing is a decline in demand. The depth of the decline now suggests that this industry downturn for 2001 will be as steep and severe as the declines in 1975 and 1985. At the start of the second half of 2001, many semiconductor suppliers and systems companies are deploying a second round of layoffs or are announcing global cost-reduction programs,” adds Gartner.

The impact of this decline of the semiconductor and electronics industry in the Americas is also predicted to spread further a field with Europe and Japan next in line.

In addition, the analysts expect hiring freezes, further layoffs and R&D spending cutbacks from semiconductor vendors, which, it predicts, will leave many with weakened workforces and weaker technology bases from which to develop new product strategies.

Gartner suggests that the outlook will only become brighter when fast chip demand picks up.

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