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Gartner Warns for Semiconductor Downturn

30 percent chance of the U.S. going into a recession

November 12, 2007 - The semiconductor industry could be heading for a downturn, Gartner analysts warn. A recession in the U.S., caused by the credit crisis and the climbing oil prices, would lead to consumers having less money to spend on electronics, which would sharply slow the sales of semiconductors.

Klaus Rinnen, a managing VP at Gartner, stated that the downturn in demand would likely extend into 2009. For 2008, semiconductor equipment companies are most at risk, while chip companies would be for less impacted. Equipment companies' revenue in a mild recession could drop as much as 15 to 20 percent in 2008, while chip company revenue may decline in the mid-single-digit range.

Impact

According to Gartner analyst Dean Freeman, there is a 30 percent chance of the U.S. going into a recession. Gartner calculated that without a recession, the worldwide semiconductor industry would see an 8% increase in revenue next year. A recession could mean a 3% to 7% decline.

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