Gartner has warned against a wide-scale bailout of the failing memory industry.

"News continues to show the dire financial situation that most of the vendors are in, with speculation that governments will step in to support the manufacturers," explained Andrew Norwood, research VP at Gartner. "Widespread government support for the industry would be a disaster: It would just prolong the current downturn rather than forcing the vendors to further reduce production or causing consolidation."

Gartner also estimated that worldwide semiconductor industry revenue would total only $261.9 billion in 2008, posting a decline of 4.4 per cent compared to 2007.

"In the last quarter of 2008, market conditions deteriorated significantly, and as the fourth quarter has progressed, many vendors have issued updated guidance for the quarter, reflecting weakening market conditions," said Norwood. "Unfortunately for vendors, 2009 is going to be considerably worse. Some have compared the precipitous decline in semiconductor demand to that of the 2001 'dot-com' bubble. However, unlike 2001, this economic downturn is much more broad-based and not limited primarily to the technology sector."

According to Gartner, Intel maintained its top industry position for the 17th consecutive year and increased its market share to 13.1 per cent in 2008, while Qualcom recorded a 15 per cent increase in revenue. In sharp contrast, Hynix posted a 29.7 per cent drop in in revenue.

As IT Examiner previously reported,  Powerchip Semiconductor Corporation (PSC) chairman Frank Huang recently pleaded with Taipei to formulate a comprehensive rescue plan for the island's rapidly deteriorating memory industry.

According to Huang, a government bailout of chip manufacturers would help avoid a South Korean-dominated memory market. Huang explained that the Korean memory industry was capable of a larger production scale and creating competitive indigenous technology. In addition, Huang noted that Seoul's support for its chip manufacturers allowed the industry to successfully weather harsh economic conditions. The panicked PSC chairman cautioned that a wide-scale bankruptcy of DRAM manufacturers could lead to a domino effect that would ultimately damage Taiwan's fragile financial sector.

Promos chairman ML Chen expressed similiar sentiments and urged Taipei to follow Seoul's example of indirectly providing Hynix Semiconductor with financial aid. Chen also stated that a government rescue plan would help create long-term stability and growth.

Meanwhile, Chii-Ming Yiin, Taiwan's minister of economic affairs, confirmed that the Ministry of Economic Affairs (MOEA) has approved a rescue package for local Taiwan DRAM companies. The MOEA has reportedly begun implementing various measures related to the plan.

However, the memory industry continues to report heavy losses. For example, Etron Technology and Elite Semiconductor Memory Technology (ESMT) recently posted significant revenue decreases for November. Etron recorded revenues of NT$406 million ($12 million), down a sequential 28.9 per cent. The company generated accumulated sales of NT $7,294 million from January to November, which represented a 40.3 per cent decrease compared with the same period of 2007. ESMT announced a revenue drop of 62.6 per cent on year and a sequential decrease of 46.5 per cent.

The grim outlook for memory manufacturers is not expected to improve any time soon. Analysts estimate a sequential drop of approximately six per cent, or 70,000 wafers (12-inch equivalents), in overall DRAM output during the first quarter of 2009. X

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