Economic slowdown impacts electronics equipment, chips

By Jim Carbone -- Purchasing, 4/9/2008 12:56:00 PM

Global semiconductor and electronic equipment suppliers are feeling the pressure of the economic slowdown.

Five of the six major segments of the global electronic equipment business--computers, industrial equipment, automotive gear and wired and wireless communications--are expected to suffer lower growth in 2008 than they did in 2007, according to researcher supply.

The widespread slowdown will hold worldwide OEM revenue expansion for all types of electronic equipment to 5.9%, down from 7% in 2007.

This will have a negative impact on semiconductor sales, which now are expected to rise only 4% to$279.6 billion in 2008, up from $268.9 billion in 2007. The researcher’s previous semiconductor forecast called for 7.5% revenue growth in 2008.

“Revenue growth in each electronic equipment segment is being impacted by a variety of specific factors,” says Gary Grandbois, principal analyst with iSuppli. “However, the macroeconomic impact of the U.S. sub prime mortgage crisis is the underpinning of the market slowdown.”

He says the global electronic equipment market has posted five strong years of growth in a row. But weakness in some application markets coupled with a slowing trend in global economic conditions, led by a U.S. slump, dim the prospects for strong equipment growth in 2008.

The biggest single area of slowdown in 2008 for electronic equipment will be in wired communications gear used for telecom and cable network infrastructure. Equipment revenue growth in this area will amount to only 3.6% in 2008, a dramatic reduction from the 13% expansion in 2007.

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