The recession is already hitting the semiconductor business but tight capacity might mean a rapid turnaround in fortunes. FUTURE HORIZONS president Malcolm Penn has said at almost all of the seminars he has hosted in the last ten years that the semiconductor business can manoeuvre itself into having a bad year in a good economy. But when it's a bad economy, the chip business has to work hard to not fall into recession. Most of the problem lies in chip pricing. Penn points out in his latest report that, in the last 22 years, unit shipments of integrated circuits (ICs) have shrunk year-on-year only twice. Once was in 1985 when the general economy was in rude health; the second was 2001 when GDP growth slipped below 3 per cent. The problem is that the value of the industry has fallen more often because pricing slips out of control during recessions. When the economy sneezes, the semiconductor business does not just catch a cold, it contracts influenza with a side order of pneumonia.
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