Chip sales are expected to be down anywhere from 10 percent to 20 percent, and many analysts have recently been scaling back their numbers. The chip equipment will probably fare even worse. Robertson Stephens analyst Sue Billat said she is looking for total sales in the sector to fall 20 percent to 30 percent this year, with revenues for Applied Materials of Santa Clara, the leading equipment maker, falling 19 percent. The problems started to surface among chip makers last summer, as sales of both personal computers and cell phones started to slow. Santa Clara-based Intel, the world's largest chip maker, and its main rival, Advanced Micro Devices of Sunnyvale, both reported disappointing earnings in the fourth quarter, which is typically the strongest quarter of the year.
Sales remain sluggish.
However, Hans Mosesmann of Prudential Volpe says that things could start to improve among PC makers and their chip suppliers in the fourth quarter of this year because most of the excess inventories are being used up. Others are not so optimistic. Search our database of the 150 largest publicly traded Silicon Valley companies.