Semiconductor industry facing dark times

Chip maker utilisation rates are estimated at around 85 per cent

The semiconductor industry is in for a rough ride for the foreseeable future, according to analyst firm Gartner.

According to a new study, the hostile economic climate means that OEMs are reporting below average demand for electronic equipment production, and this is knocking on through the supply chain right up to the component manufacturers.

Furthermore, Gartner predicts the problem is not going to get better for some time.

Many in the chip industry are also seeing their production utilisation rates drop, with the average estimated to be around 85 per cent.

"The excess spending of 2006 and 2007 has hit home in 2008, and the semiconductor equipment industry will continue to feel the pinch well into 2009, " said Dean Freeman, research vice president for Gartner's semiconductor manufacturing group.

As a result, many of the biggest players in the industry are adjusting their financial forecasts, with chip maker Linear Technology for example anticipating its fourth quarter sales to be 20 per cent down on its third quarter figures.

Another industry player, audio codec supplier Wolfson Microelectronics, reckons that its fourth quarter revenues will be down 24 per cent from the previous quarter, while chip packaging company ChipMOS Technologies has reported a revenue fall of 33 per cent for September 2008.

Even demand for chips designed for the highly popular netbook PC format is expected to be 20 per cent down on original forecasts for 2008, at around eight million units.