OECD says there’s signs IT market is recovering

A report from the OECD said that sales of information and comms technology showed a “sudden upturn” in May and June and could well be signs the industry is on the road to recovery.

The report said what we already know – the IT industry had a difficult start this year, with nearly all sectors in decline, some very sharply indeed.

And, says the OECD, the IT industry is performing far better in the current recession than, for example, the automotive industry.

The meltdown is different according to the region. Asian members of the OECD have been particularly hard hit, the report says, with production slumping and inventories rising, especially in Japan.

Taiwan’s output was down by 40 percent in the early part of 2009 but the upturn has been rapid in Korea, Taiwan and Korea. China has also returned to positive growth.

The semiconductor industry showed a big decline at the end of 2008 and in the first quarter of this year and capacity fell by 50 percent. Nevertheless, says the OECD, the downturn isn’t as sharp as it was in 2001-2002 apart from Asian OECD countries.

Large semi firms are in good financial shape and have net cash positions better than in 2001, with R&D and other activities financed internally. Semiconductor R&D has fallen far less than revenues.

Taiwan had a very large slump in flat screen and semi products but have picked up by around three percent year on year. In June-July 2008, growth was 20 percent.

This graph shows the utitilization rate of semiconductor manufacturing facilities (fabs) in percentages. The stats are based on data supplied by merchant semiconductor manufacturers, based on Semiconductor Industry Association (SIA) figures.

Venture capital was constrained by the availability of money and the opportunities for successful exit strategies.

2009 is expected to see a a year on year revenue decline for the semiconductor sector of around 20 percent. Memory companies have been particularly hardly hit caused by both falling demand and overstocking. However, semiconductor companies have better cash reserves than during the dotcom crash.  Netbooks will cause an overall decline because they’re seen by buyers as a substitute for higher priced notebooks.