SINGAPORE: The semiconductor industry is among the latest to be hit by the global economic slowdown. Industry observers said the sector is expected to slow in the second half of this year and also in the first half of 2009.

The earliest rebound in global chip demand is unlikely to happen until at least 2010, according to them.

Demand for mobile phones and personal computers remained strong in the first half this year. But as consumer confidence drops on the back of a global economic slowdown, so too will spending.

Philip Koh, research vice president, Gartner, said: "We do expect that the market will be impacted from the macro economic slowdown. There are some indications, particularly from major players in the industry that they are seeing growth coming in a bit more on the lower single digit growth."

According to Gartner, the worldwide semiconductor industry is expected to book US$285.4 billion in revenues this year, lower than previous forecasts of US$287 billion.

For this year, growth has been cut by nearly half to 4.2 per cent, from 8.2 per cent previously. And this is expected to be trimmed further if the global economy continues to slow down further.

Despite this, Gartner said it expects the Asia Pacific region to continue to drive the global industry. It also expects the Asia Pacific to be the largest semiconductor consuming region.

Mr Koh added: "Asia Pacific will still maintain the bigger chunk of the semiconductor consumption market. I think that's primarily because most of the electronics equipment manufacturing are done in Asia, particularly in China.

"And I think as we move ahead, we still see that markets like India is coming in, attracting more investments."

The Asia Pacific region is expected to account for 58.3 per cent of the worldwide semiconductor market by 2012, up from 55.7 per cent currently. - CNA/vm