The semiconductor industry is facing its worst annual downturn, according to new figures from IC Insights, a U.S. market research firm.
A report issued Monday predicts that the market will shrink by 21 percent in 2001 from 2000. The figures are worse than IC Insights' previous prediction of a 9 percent decline issued in March.
As a result of the end of dot-com euphoria and a serious slowdown in the U.S. economy, many companies have stopped ordering new computer equipment and have canceled existing orders. Even the biggest semiconductor companies have felt the pinch: Intel, for example, is expected to see its second-quarter revenue down as much as 25 percent for the same period last year.
The new research underscores the dramatic nature of the downturn for the chip industry. IC Insights says the worldwide integrated-circuit market will shrink from $177 billion in 2000 to $139.2 billion in 2001. If the prediction proves correct, 2001 will be worse than 1985's record contraction of 20 percent.
In the third quarter, the market is expected to recover by 6 percent over the second quarter, followed by a sequential increase of 11 percent, IC Insights said. It believes that, barring a recession, the market will continue to recover to reach $162 billion in 2002, a 16 percent increase this year.
Staff writer Matthew Broersma reported from the United Kingdom.