Demand-driven downturn possible in 2008
Edited by Suzanne Deffree -- EDN, January 10, 2008
The new year could bring a demand-driven downturn, Gartner Inc cautions. Government economists and financial counselors have warned that the United States could experience a recession due to subprime-rate-mortgage debt and the US-initiated, and now global, “credit crunch.” As a result, Gartner believes the semiconductor industry could see this downturn in 2008.
Although the effects of such a downturn would be milder than those of the 2001 bubble burst, they depend on the electronics segment in the supply chain, Gartner says. The research company notes that the downside risk is lower for semiconductor companies, given a slow 2007, and higher for capital-equipment companies, given the substantial memory-related capacity investments in 2007.
According to Gartner, equipment companies’ revenue in a mild recession could drop as much as 15 to 20% in 2008, whereas chip-company revenue may decline in the mid-single-digit range. Gartner predicts that, if a recession were to hit the United States, the possible semiconductor-industry down cycle would likely extend into 2009, depending on the impact on other global economies and the severity and speed of the US recovery.
