Chips market will struggle until 2003

In a market known for being cyclical, 2001 may go down as a worse-than-usual low point for chipmakers.

Analyst house Gartner Group Dataquest has said semiconductor revenues for calendar 2001 will, at $147bn, be down 35 per cent compared to last year.

Arguably worse still, it will take the industry all of next year to recover, with sales in 2003 finally approaching 2000 levels.

As a result, major chipmakers such as AMD, Infineon, Intel, Motorola and Texas Instruments are all tightening their belts, with some even closing or putting off construction of new fabs, the plants where semiconductors are made.

The Gartner report forecasts the recovery in 2003 is likely to be driven by improved demand from PC and server providers, 3G phone handset makers and general economic improvement.