Looking Forward in Tragedy's Wake
Aaron J. Hand, Managing Editor -- Semiconductor International, 10/1/2001
To say the least, the tragic events of Sept. 11 have put many other events into perspective. Even those who did not lose family members, friends or colleagues in the attacks mourn the precious lives that were lost, as well as the loss of comfort we had taken for granted in the United States. What had for months been daily headline news — the dreadful state of our economy — was pushed to the back burner. Suddenly, economic woes didn't seem nearly so woeful.
Despite the continued concern for the physical well-being of citizens in many parts of the globe, it didn't take long at all for much of the focus to turn back to the economy. At first the shift in focus seemed callous — who cares how soon the semiconductor industry will see an upturn when so many thousands of lives have been shattered? Phrases like "The attacks couldn't have come at a worse time for the semiconductor industry" seemed completely out of line.
But I must finally admit that we do indeed care. No matter how deeply we may be mourning, we still have to worry about what has become an even more dismal situation in the general economy and — more specifically — the economic state of the semiconductor industry. Several industry analysts, releasing predictions at the beginning of September, released revised predictions after the terrorist attacks, adjusting their near-term predictions downward and citing lower consumer confidence as an obvious reason. Presenting Sept. 24 at SEMI's Microelectronic Materials Strategy Symposium in San Francisco, industry analysts noted that any bets made before the attacks regarding near-term market conditions were now off. In fact, technology stocks were some of the worst hit when the markets opened again six days after being shut down.
In a release dated Sept. 20, Bill McClean, president of IC Insights Inc. (Scottsdale, Ariz.), noted that many people had expressed great concern about the future of the semiconductor industry. "There is little doubt that the tragic events of September 11th have harmed the economies of many countries," he said in the statement. Expected to show about 2.4% growth for 2001 before the attack, the worldwide GDP was likely to drop to 1.8-2.0% now — a difference that takes us from the edge of a recession to fully within recession range. Predicting a decline of ~15% for the third quarter, IC Insights now expects the worldwide IC market to decline 34% in 2001, to ~$117B.
Industry researcher iSupply Corp. (El Segundo, Calif.) cited the terrorist attacks when it announced a revised semiconductor revenue forecast Sept. 26. Previously predicting that semiconductor revenues for 2001 would drop by 28.3% two weeks earlier, the company modified that decline to 30.9%. The researchers still expect a modest gain this quarter, however. Also, previously predicting 9.9% revenue growth for 2002, iSupply lowered that estimate to 4.1%.
IC Insights' McClean, however, made some interesting comments related to the long-term outlook of the world economy. Not only are recent interest rate reductions in the United States, the European Union, the UK and Japan likely to lay the foundation for an economic rebound in 2002, there may be another significant effect of the tragedy, stemming from the fact that almost every country in the world has joined to denounce the terrorist attacks. "The long-term positive of so many politically diverse countries finding some 'common ground' may be an increase in cross-border trade and business," he said.
Let's hope that the positive can overcome.
