The economic woes of the world have hit the semi industry hard, and, according to Malcolm Penn, CEO of Future Horizons, has turned ugly.

But he cautions against widespread depression in the semiconductor industry. In his latest report to his market research clients, he said: "It's important to remember that this is a side effect of the worldwide financial problems, not the problem of the industry itself."

He said the market is bound to rebound, and semiconductor manufacturers should start planning for that now. He said that as a result of a lack of confidence, falling unit demand will create extra capacity which will force prices down. That's because firms will struggle to keep the fabs loaded. He also thinks that technology will once more drive the recovery process, once it comes, but predicts a year of austerity ahead.

The report from Future Horizons also looks in some depth at solid state drives (SSDs) against magnetic hard drives. It claims that OEMs will have to get more familiar with the technology of SSDs to build systems confidently.

Server vendors, in particular will need to be convinced of the long term reliability of SSDs. And there's still life in magnetic hard drives, says Future Horizons. The price per bit continues to fall while capacities continue to rise. SSDs still have a price premium as far as notebooks are concerned.

Future Horizons conclusions are that the SSD market is new and there's lots of hype to the tune that magnetic HDDs will die. Further, high performance SSDs are mostly used in niche markets like aerospace and military applications, while the prices of flash need to crash and for notebooks currently SSDs are designed for low cost ultra portable PCs and have limited storage. X

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