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   13th Feb 09

 Q4 2008 revenues freeze semiconductor industry to a dope less silicon

The bad weather is no stranger for semiconductor industry. It may not be yearly but approximately once in five years the industry experiences sudden fall in revenue to feel very cold and seeking protection(by comparing the revenue to dropping temperature in cold season).
However 4th Quarter of 2008 was terrible. On average any leading semiconductor expert is posting approximately 20 to 30% fall in revenue. The hard hit section DRAM is most affected and also is the first industry to show some signs of quick recovery with slight increase in DRAM prices.Such is the volatility of memory business; it can be advised not to believe any analyst prediction in this sector.

Next badly hit area is consumer device, it can be MOSFET used in MP3 player or an audio IC. The devices, which make these handheld media gadgets, are resting in the inventory glut of manufacturer and distributor. Until the overall economy improves and the middle class buyer start spending more it will be hard for these devices to come out of those inventory stocks.

Drop in car and mobile phone sales is directly proportional to drop in semiconductor demand used in them. There is a paradigm shift underway in both automotives and telecom, which may offer huge opportunity for power ICs, wireless ICs, SOCs and sensors. The demand in this market may start by end of 2009 or early 2010.

Wireless IC was one of the fast growing area a few quarters earlier, but now these are also having bad time. One good thing is wireless not only goes into these media convergence consumer devices but also used in industrial applications.

Actually, it's difficult to estimate the semiconductor device market by function. The loss causing variables are application areas. If we look at FPGA, its hardly used in consumer so its less affected. Same can be applied to precision analog (minus audio/video ICs) which is in better position.

The application areas least affected by recession are aerospace/defense, medical electronics and industrial (in this order). It's not everyone's pie. There is a sizable market but only few players are capable.

While solar is buzzword for time being, the drop in crude oil is haunting it.

It looks like some new business application (something more powerful than computer and internet) coupled with environment friendly 'energy production and saving technology' might be the next take for semiconductors. Now people want to earn money, improve business efficiencies, and conserve energy as much as possible. Once that's achieved than will go for some piped music on a beach again enabling the consumer market.

The clear visible notice, whenever the semiconductor industry down is, the sector must have changed the role from driver to dependent. Once the industry get back to driver seat through innovation, the revenues start growing.

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