MarketBite

Disasters, economic malaise whack chip industry

Posted on: November 18, 2011


Bad news for anybody in the business of making the chips that power PCs and store movies on iPads. (Credit: Data from IHS; chart by Stephen Shankland)

IHS today said it’s dramatically reduced its forecast for semiconductor sales worldwide for 2011, cutting the expected growth rate from 2.9 percent all the way down to 1.2 percent. The industry has swung from boom to bust many times in its decades of existence, but hard times still have the same unpleasant ripple effects: less money to fund research into next-generation products and to pay for next-generation manufacturing facilities.

And it’s those investments that ultimately matter to the consumer eager for more smartphones with computing horsepower, cameras that take photos in dim conditions, and tablets that can store more movies to entertain the kids during a cross-country road trip.

The market research firm attributed the problem to a one-two punch of natural disasters.

First came the earthquake and tsunami in Japan that hampered operations there. Next came flooding in Thailand that hobbled hard-drive manufacturing and therefore is hurting personal computer sales.

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