Worldwide computer-chip sales fell by one-third this year, the industry's worst drop, and many producers will find recovery difficult, Gartner Inc's Dataquest market-research unit said.
Global semiconductor sales fell to US$152 billion this year, according to preliminary data by Dataquest. Sales at Intel Corp, the biggest chipmaker, and STMicroelectronics NV, Europe's largest, dropped 22 percent and 19 percent.
"The fact is, nobody has a clue what's going to happen until it happens," said David Katz, chief investment officer for Matrix Asset Advisors Inc, which owns technology stocks including Motorola Inc, Compaq Computer Corp and Computer Sciences Corp.
Microsoft Corp's new computer operating system, Windows XP, might spark demand among consumers, or the next generation of cellular telephones may boost sales beyond forecasts, Katz said.
"But, if the economy takes another dip, then people won't be buying, and the predictions will be wrong," said Katz, whose fund has risen about 11 percent this year.
NEC Corp suffered the most among the top 10 chipmakers, with a 49 percent decline this year, according to Dataquest.
"We expect further consolidation of the industry during 2002," Mary Olsson, an analyst at Dataquest, said in the statement.
Consumers and businesses have been buying fewer personal computers and mobile phones, which has led to price cuts for the chips that power the devices.
The 10 manufacturers Dataquest cites in the report -- including Toshiba Corp, NEC Corp, Motorola, Samsung Electronics Co and Texas Instruments Inc -- have had a collective loss in market value of about US$47 billion this year.
The Philadelphia Semiconductor Index, which comprises 16 companies, has declined 30 percent to 537.61 from a 52-week high of 763.26 on Jan. 31.
Shares of Motorola, based in Schaumburg, Illinois, fell US$0.85, or 5.1 percent, to US$15.76. They've declined 22 percent this year. Dallas-based Texas Instruments fell US$1.91, or 6.4 percent, to US$27.90 and have declined 41 percent this year. Motorola, the second-biggest mobile-phone maker after Nokia Oyj, said yesterday that it will eliminate about 9,400 more jobs, an 8.5 percent reduction, on top of 39,000 it has cut since August last year. About 4,000 of the latest job cuts will come from closing some chip plants as the company hires outside production firms. While cutting jobs and chip production can lift profit, some chipmakers are looking to weather the slump by acquiring rivals.
Micron Technology Inc, the second-largest maker of computer- memory chips, agreed on Tuesday to buy Toshiba's US memory-chip business. That thwarts plans by Germany's Infineon Technologies AG to ally with Toshiba. Shares of Micron, based in Boise, Idaho, fell US$1.71 to US$30.10.
A large part of chip sales are tied to personal-computer sales. In October, Dataquest and fellow market researcher IDC said worldwide PC shipments dropped last quarter as a slump in US sales spread to Asia and Europe.
Global PC sales dropped 12 percent to 30.6 million units from 34.6 million in the same period last year, Dataquest said. IDC said third-quarter shipments declined 14 percent to 29.1 million units.
Some chip companies have indicated recently that the sales decline is at or near the end as surpluses are sold, with sales perhaps rising toward the middle of next year.
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