Industry growth wanes. That's happening now in the PC and chip sectors, says economist Jeremy Greenwood at the University of Rochester in New York. The integrated circuit's creation in the 1960s spawned a wave of electronic goods, including the PC, which uses about half of all semiconductors made. But now, more than half of U.S. homes own PCs, and sales have stalled after nearly a decade of double-digit growth. PC giants Compaq Computer and Gateway are struggling as profit margins shrink on commodity-priced PCs.
Analysts say industry consolidation is inevitable.
Micron Electronics recently sold its PC business to Gores Technology Group, and eMachines is exploring a sale. But economists say the feverish growth won't return soon. Because much of the tech-led growth was generated by overspending for technology goods by businesses afraid of lagging in the New Economy, in which the Internet and networking technologies are expected to improve everything from productivity to sales. That's the first decline since 1991, analysts say. And the nation's economy may topple into a recession.