The 2001 chip downturn has not yet bottomed out, say leading industry analysts.
At last week's Design Automation Conference, Bryan Lewis, a chief analyst at Gartner Dataquest, said the IC industry may be facing the worst year in its history. He says that, while existing forecasts point to a 16.8% decline in sales, the final figure for the year could be 25%.
Meanwhile, Andrew Norwood, Dataquest's worldwide DRAM analyst, has also said that 2001 will see the largest percentage drop in memory revenues for many years.
"DRAM is now trading below the cost of production," said Norwood. "The cause has been slowing PC growth leading to oversupply."
He describes the main DRAM producers as "playing poker" as they wait for the upturn: "It's all about who blinks first."
At rival analyst group Future Horizons, CEO Malcolm Penn also says that overall market forecasts are getting gloomier.
"We have to keep revising our numbers. Figures are only going down," he said.
"The combination of the slowdown of the worldwide economy, the overcapacity for semiconductor production and the slowdown of the PC and mobile phone markets has been like the three horsemen of the apocalypse for the electronics industry."
Penn now believes the sales decline is "at least 20%". At the beginning of 2001, he predicted a rise of around 7%.
Lewis echoes recent comments from senior semiconductor executives such as Wilf Corrigan, LSI Logic president and CEO.
Like Corrigan, he says that to find a year as bad as this, you need to go back to the mid-1970s.
"But things will pull out," Lewis added.
However, he says that long-term growth will slow from an average of 17% in 1993 to 12% by 2005.