Not Much Chip-Buying Seen Until 2010

SAN FRANCISCO -- The good news: Semiconductor manufacturing-equipment makers have called the bottom in their market.

The bad news: We're not there yet.

Chip-equipment sales will fall nearly 28% in 2008 to $30.9 billion, according to the international trade group SEMI, which said Tuesday that business has fallen to levels not seen since 2003.

The group sees another 21.4% drop in sales in 2009 before a bounce back of 30.8% growth in 2010. But even the predicted rebound comes with its own black cloud: expected 2010 global sales of $31.8 billion are less than 3% above what is projected for 2008's total.

In other words, chip-equipment sales in 2010 will still be 25% below where they were in 2007.

And even that "progress" is a guess. SEMI admits that "impaired or nonexistent business trend visibility is pervasive amidst the deteriorating global economy," leaving the group to base its 2010 expectations on what a normal industry recovery looks like.

The forecast was particularly bleak for Taiwan, the world's biggest equipment market, where sales are expected to fall by nearly half, with the region falling to No. 2 in sales behind Japan through 2010.

Sales in North America are expected to fall 14.4% in 2008 and another 22.2% in 2009, SEMI says.

That it's bad out there isn't a novel idea, of course, and recent announcements from semiconductor makers -- and their customers -- have reinforced the tough-times mantra. On Monday, the Semiconductor Industry Association said worldwide sales of chips fell 2.4% from a year ago, with expectations that demand will continue to slump entering 2009.