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PRESIDENT BUSH?S determination to wage war on Iraq is certain to postpone any recovery chipmakers may be expecting to see in an industry sector struggling through its second year of hard times.
Indeed, an analyst from the Gartner Group said today that it is likely to revise its projections for semiconductor sales for next year downwards.
Where the researcher had predicted sales might surge by 21 per cent in 2003, now a senior analyst at the firm, Dorothy Lai said this morning this figure could be slashed to just 9 per cent. Lai told a press conference in Singapore that the market "is still very rocky and visibility remains poor. The economic recovery is lagging and now we have the turmoil in the Middle East," she said. As if turmoil in the Middle East was something new. So, for 'turmoil', let?s read 'Bush?s plans to oust Saddam and install a US military regime in one of the region?s largest oil producers? instead.
Lai described demand for semiconductor products as "sluggish," and said, "We don't see any strong pickup in demand at the beginning of next year as previously forecast."
Both AMD and Intel are to unveil their third-quarter results this week and both warned sales are likely to be less than originally ? perhaps optimistically ? forecast. Suggestions that any upturn in 2003 might be less pronounced than previously suggested would be most damaging for AMD. Having become a recognized name in the desktop sphere thanks to its Athlon processor, Intel?s upstart rival will be pining its hopes on a push into the more lucrative corporate space with its much-hyped Hammer processors due for release in the earlier part of next year.
But uncertainly and doubt will be exacerbated by a potentially bloody conflict in the deserts of Iraq. Given that the intention is to oust Saddam, significant American casualties could be expected from a ground offensive which would prove far more difficult for the US forces than carpet bombing from on high.
Against such an uncertain outlook, chipmakers can?t reasonably plan for Gartner?s previous forecast of over 20 per cent growth in the flagging market. Lai?s pronouncements in Singapore pegging these forecasts back to 10 per cent won?t surprise executives of the fabbed or the fab-less, but they will make for uneasy reading.
China, of course remains the Great Red Hope. Located far enough from the Middle East and gagging, it seems, for a computer in every school, college and Internet café in even the most remote village, chipmakers have been seeking alliances and routes to market in the populous republic.
In the longer term, China is indeed an attractive proposition. The challenge, particularly for AMD, is to weather the short-term squall. And no matter how fantastic Hammer turns out to be, the matter is largely out of AMD?s hands.
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Way to go Bush. Yet another reason he should not be declaring war right now.
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