Semiconductor business has hit the bottom says Gartner

Research data from Gartner indicates that the semiconductor industry has hit the bottom of the recession and that sales are starting to rebound.

Speaking at SemiCon 2009 Bob Johnson, vice president of research at Gartner, told delegates that the industry had bottomed out and forecasted overall growth in revenues until at least 2012.

“Guys, we’ve weathered another one,” he said.

“We think we’ve found the bottom. Things are starting to look better and that’s even when we’re taking a conservative view.”

He said that the effects on the industry had been lessened significantly by much better inventory management from managers, in comparison with the last downturn in 2001. This saves the industry from large amounts of surplus product that depress prices.

In 2001 the industry reacted too late to the slowdown in demand – in the fourth quarter of 2000 revenues dropped 15 per cent but inventory increased by 25 per cent. By contrast he said that companies had almost slammed the brakes on orders too hard and now companies were ordering again to cover basic inventory needs.

However, he forecast stormy times ahead for memory manufacturers, with a long hangover from the capital spending binge of the last four years and another crash for the memory market in 2013, as the industry will again allow spending to get out of control.

“Despite two bankruptcies in the industry we don’t think they’ll learn the lesson until they’ve been through another down cycle,” he warned.

Despite the improving outlook he said that while there would be steady growth in the industry revenues would not reach the same levels of spending before the downturn for the foreseeable future and certainly not before 2013.