Chip Sector: No Double Dipping!

So much for the semiconductor industry’s predicted late-2009 recovery.

Annual world-wide sales of semiconductor chips declined for the first time since 2001, according to new metrics from the Semiconductor Industry Association. Chip sales in 2008 slipped 2.8 percent to $255.6 billion, with sales in December alone plummeting a grotesque 16.6 percent to $22.3 billion (click on chart below).

“The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry,” George Scalise, president of the SIA, said in a statement. “Weakening demand for the major drivers of semiconductor sales–including automotive products, personal computers, cell phones, and corporate information technology products–resulted in a sharp drop in industry sales that affected nearly all product lines. Once again, the steepest revenue declines were in the memory sector where price pressure more than offset significant growth in total bit shipments…. The industry is currently facing an unprecedented period of uncertainty.”

And that’s grim news. Because the semiconductor sector is typically among the first industries to recover ahead of a broader market turnaround. This latest report suggests a recovery is likely much farther off than we’d hoped.