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Recession Has Chipmakers Reeling

March 3, 2009

As demand for manufactured electronic items continues to drop amid the recession, semiconductor chipmakers are being forced to face plummeting sales.

Global semiconductor sales dropped 28.6 percent to $15.3 billion this January, compared to January 2008, the Semiconductor Industry Association said.

Sales declined by 11.9 percent from December 2008 when sales were $17.4 billion, it said.

“Worldwide semiconductor sales in January, historically a relatively weak month for the industry, reflected a continuing erosion of consumer confidence and the effects of the global economic recession,” SIA President George Scalise said in a statement.

“Sales declined across the entire range of semiconductor products, as sales of important demand drivers such as personal computers, cell phones, automobiles and consumer items remained under pressure.”

“Inventory levels are very low and there are some signs that forward visibility is improving.”

SIA said the new Economic Recovery Act along with measures adopted in other countries could help “drive future demand for semiconductors while addressing important issues such as energy, health care, and infrastructure improvements.”

“This is the worst recession the semiconductor industry has seen since its inception,” said Sean M. Maloney, the chief sales and marketing officer at Intel.

Today, chipmaker Xilinx Inc changed its March-quarter outlook to forecast sales drop of 13-18 percent compared to a previous forecast of 15-25 percent. The company cited better-than-expected wireless communications sales.

On Monday, Xilinx’s rival, San Jose, California-based Altera Corp raised its sales outlook for the same period, citing stronger demand for next-generation wireless equipment in China. Altera now expects a decrease in sales by 15 percent to 20 percent rather than its previously forecasted 15 percent to 25 percent.

Altera posted fourth quarter net income of $83.04 million or $0.28 per share, up from $65.48 million or $0.20 per share during the same period last year.

According to the New York Times, Gartner research firm expects computer sales to decrease by 12 percent in 2009 to 257 million units.

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