The analysts suggest the wild card for the industry in 2009 is DRAM, a sector that has been in a downturn for 18 months and losses are now approaching $12 billion.
"The DRAM market is so bad that suppliers must either significantly scale back supply, or the weaker players will be forced into mergers or bankruptcy. Either way, we are expecting DRAM pricing to firm during the second half of 2009, and this has the potential to moderate the decline in 2009 semiconductor revenue," said Norwood.
"Only widespread government support for the ailing DRAM vendors could avert this supply rationalization, and that would be a disaster for the industry as it would just prolong the current downturn," Norwood added.
Gartner also warned of an even tougher scenario, suggesting that the semiconductor industry could decline 24.7 percent.
"However, with such a steep decline in the fourth quarter of 2008, it is possible that some companies have over-corrected to be on the safe side by keeping inventory levels at the absolute minimum," said Lewis.
"This leaves the door open for semiconductor sales in the first quarter of 2009 to be somewhat better than seasonally expected as some inventories will need to be replenished,” Lewis added.
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