• silicon.com
• Management
• CIO Insights

By Ron Coates, 7 June 2001 13:10

NEWS The global chip industry is suffering its worst decline for 16 years but recovery is in sight, according to analysts and top industry figures. But the shakeout is still causing casualties as the industry makes rapid moves to reduce capacity. Kirk Pond, CEO and chairman of the Semiconductor Industry Association and president of Fairchild Semiconductor, said in a statement: "Despite the sales decline brought on by excess inventory this year, the semiconductor market is still projected to hit $283bn by 2004. "This year the industry took action with the first signs of the downturn and began reducing its capacity in only two quarters." Pond was releasing the authoritative SIA figures on worldwide chip sales which showed a fall in the US of 22 per cent; a European decline of six per cent and a worldwide decline of 14 per cent. But the association predicts an industry-wide recovery in the second half of this year leading to growth of 20 per cent in 2002 and 25 per cent in 2003. Andrew Norwood, senior analyst at Gartner, said: "You can be a little confused by all the bad news, but this is roughly in line with what we predicted two months ago. This has always been a rollercoaster industry, but this decline has been exceptionally steep. "You have to have nerves in this industry and be prepared to stick it out." The casualty toll is still rising throughout the industry. At the beginning of the chain, Texas Instruments yesterday announced it would briefly shut two Dallas chip plants, temporarily idling 1,800 workers. Communication chip-maker Broadcom yesterday said revenues will be down 30 per cent this year and added that it will cut an unknown number of staff. Ingram Micro, the largest chip distributor in the US, yesterday said it will cut 1,000 staff in a reorganisation Dutch chip equipment maker ASM Lithography, which boasts 50 per cent of the world market, said unit sales in 2001 will be at the bottom of its predicted range at around 230 systems. But yesterday in London, Wilf Corrigan, founder and CEO of LSI Logic, put himself on the side of the optimists. He said 2002 will see a "fairly strong rebound" and while warning that the bottom had not yet been reached, said the recovery could start before the end of the year.