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Global PC semiconductor market spirals

According to reports from analysts at IDC, the demand for PC semiconductors has plummeted in the past year.

According to reports from analysts at IDC, the demand for PC semiconductors has plummeted in the past year. The situation is, apparently, so bad that the market will not return to its total revenue level of 2000 until after 2005.

"The US PC market in units will decline for the first time ever this year, and worldwide growth will only be in the single digits. Naturally, this decline impacts PC semiconductor suppliers severely," says Shane Rau, senior analyst for IDC's Semiconductor: Desktop and Mobile PCs research program. "Even though inventories for some semiconductors have burned off, demand remains very soft and will remain soft through the second half of this year."

IDC forecasts revenues in the total worldwide market will fall from $50.3 billion in 2000 to $38 billion in 2001 — a loss of $12 billion. The desktop PC semiconductor market will be hardest hit. Its revenues will free fall from $38.6 billion to $27.3 billion — a loss of more than $11 billion. Mobile PC semiconductors revenues will experience a drop of less than $1 billion, from $11.7 billion to $10.6 billion.

In terms of semiconductor components, microprocessors and DRAM lead the downward spiral. IDC estimates worldwide microprocessor revenue will fall from $27.1 billion in 2000 to $22.2 billion by the end of 2001. PC DRAM revenues will decline from $12.4 billion to $6.6 billion during the same time.

"Intel recently announced its microprocessor business has stabilised, and this announcement generated optimism that the downturn in the PC chip business is ending. However, we believe this optimism is unwarranted," says Rau.

"Firstly, PC OEMs are sending different signals and secondly, while the microprocessor is a major chip inside any PC, it's only one chip. Other semiconductor companies that make chips for the rest of the PC, such as DRAM suppliers, are not doing well, and we don't think they will begin to recover - at least to the point where revenues begin to climb again rather than fall - until next year," he adds.

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