It's now clear that the shakeout in the PC industry will be far more severe than anyone expected only a few months ago.
Reports from different sectors such as the LCD monitor manufacturers, DRAM vendors and giant X86 CPU maker Intel are further amplified by today's report from IDC about PC sales, and yesterday's report about weakness in the server market. Compal, one of the biggest ODMs (original design manufacturers), reported today that it will cut its notebook shipment forecasts for the fourth quarter.
TSMC, the largest pure play foundry player in the world, has told its staff they have to take unpaid leave too, as its fabs run below capacity. It's also warned that capital spending will be reduced in 2009. TSMC takes designs made by semiconductor companies that don't have fabrication plants and turns them into working products. If its fabs are running below capacity, that's a definite indication that orders from its fabless customers are down.
While DRAM is a special case because there's been oversupply there for nearly two years now, the precipitous slump in the third quarter of this year is also a reasonable barometer to the weakness in the entire market.
All of this is underlined by weakness in the retail sector - it seems that across the board people are skimping on buying. There's evidence in the UK that people are even buying their groceries from cheaper supermarkets. If people are cutting back on the essentials, there's no doubt that they'll be thinking twice about luxury items like PCs.
And it's not just the hoi polloi who are tightening their purse strings. Weakness in the server market, demonstrated in IDC's report yesterday, indicates that corporate players and small and medium sized businesses are also hunkering down for a long cold winter.
If people do have money to spare, there will undoubtedly be some bargains to be had because PC units already manufactured will have to be sold.
It's still totally unclear to most people when the global recession will end. Few pundits seem to have seen it coming, so it's fair to say that you'd be as well looking at tea leaves in the bottom of a cup as relying on financial analysts to understand the future.
What has happened this time round is that the normally cyclical nature of the semiconductor and PC markets has been disrupted - the third quarter has always, in the past, been the healthiest period of the year.
It's going to be a freezing winter for the entire industry, and expecting an early thaw may well be way too optimistic. X
DRAM market collapsed in the fourth quarter
Chip foundry imposes unpaid leave plan
Taiwan nixes wide scale DRAM bailout
PC sales slow as recession widens
IDC reports server market slowdown