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.

As the SIA pointed out, personal computers and cell phones account for about 60% of semiconductor demand, and 2009 PC shipments are expected to fall 5% with cell phone shipments declining by 9%.

On Tuesday, Oppenheimer cut its estimates below the Street consensus on several cell phone-related stocks, including


(NOK) - Get Report



( MOT) and

Research In Motion

( RIMM), as the firm suggested fourth-quarter industry trends were lagging recently lowered targets by Nokia.

Lower demand means fewer chips are needed, which in turn means less chipmaking equipment is needed. This sets up a daunting couple of years for companies like

Applied Materials

(AMAT) - Get Report



(KLAC) - Get Report


Lam Research

(LRCX) - Get Report

, all of which haven't enjoyed the most fruitful year.

Shares of Applied Materials, for example, fell in half to $9 in the past five months as year-over-year sales fell in its past two quarters by 28% and 14%, respectively.

In its earnings conference call last month, Applied said it expected chip factory utilization to continue falling into the first half of 2009, adding that it expected an extended industry downturn of a year or longer.

It's that "or longer" part that is worrisome to anyone trying to find a bottom in chip stocks.