The semiconductor market has been deteriorating rapidly since the beginning of the year, and market research firm IHS Markit has slashed its forecast for chip sales by more than 10%.
The chip market is poised to decline by 7.4% to $446.2 billion in 2019, according to IHS. The firm had previously projected that chip sales would increase by 2.9% this year.
A decline of 7.4% in chip sales would mark the worst down year for the semiconductor industry since the Great Recession in 2009, when the semiconductor market declined by nearly 11%, IHS said.
Amother market research firm, IC Insights, is currently forecasting that chip sales will decline by at least 9% compared to last year. The World Semiconductor Trade Statistics organization — made up of a group of semiconductor suppliers that pool sales data — has projected that the market will fall by about 3% this year.
The downturn is due to increasingly soft demand combined with a rapid rise in inventory levels during the first quarter. Product segments including DRAM, NAND flash, general purpose microcontrollers, 32-bit microcontrollers and ASICs all suffered double digit revenue declines in the first quarter, according to IHS.
However, IHS is forecasting that market conditions will recovery in the third quarter, led by a recovery in sales for NAND used in solid-state drives and smartphones and a processors used in notebook PCs and servers.