Intel, Advanced Micro Devices, Samsung and other chip providers have been hit by the economic downturn in a hard way, as research firm IDC expects a 22 percent decline in global semiconductor sales this year.
According to IDC, the semiconductor market was one of the first affected by the recession that began in late 2007. In 2008, revenues from semiconductors declined 2 percent.
The trend will only accelerate in 2009, fueled by massive declines in the key areas of unit shipments, low utilization rates and price erosion.
"The semiconductor industry downturn will be prolonged by macroeconomic uncertainty this year," Mario Morales, vice president for Semiconductor Research at IDC, said in a statement. "With demand visibility low, utilization rates at frozen levels and supplier inventories growing because of deteriorating demand targets, IDC does not expect year-over-year growth for semiconductor revenues until the second quarter of 2010."
IDC sees connectivity, wireless broadband, multicore processors and NAND as technologies that suppliers will invest in even during a downtown; however, they also projected capital spending by players in the semiconductor market to decline by 45 percent in 2009.
Earlier this week, Gartner released its own analysis of the semiconductor industry, predicting record revenue declines in 2009 of 24.1 percent versus 2008 revenue.
In December 2008, Gartner predicted the 2009 fall-off would be around 16 percent, but revised its estimates after taking into account "worsened" market conditions. Like IDC, the firm predicts that the industry will return to positive growth in 2010.
"We believe that the financial crisis has reset the semiconductor market," Bryan Lewis, research vice president at Gartner, said in a statement. "After the 2001 recession, in which semiconductor sales plummeted by a record 32.5 percent, semiconductor sales took about four years to get back to 2000 levels."