Flip the calendar back a year, and the semiconductor industry could hardly have imagined the carnage that awaited. Sure, PC sales had already tanked, but about 55% of all chips were going into other products―cellular phones, digital games and gadgets, and industrial equipment. Chipmakers thought the broader diversification would shield them from the vagaries of the PC business, which had long been a mercurial taskmaster, gobbling up more than half of all chips. There was even hope that increasing market diversity would help insulate the sector from its historical boom-bust cycles. Sorry, guys. Weak consumer and corporate demand, excessive inventories, and a shaken U.S. economy slammed the brakes on the double-digit growth found during the go-go dot-com years. Chip sales skidded 31% last year―the worst downturn ever, according to the Semiconductor Industry Assn. (SIA).
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