iSuppli: Chip biz has lost 'money-making touch'

 
SAN FRANCISO—The semiconductor industry now has a lower profit percentage than the historically low-margin PC business, something that occurred only once before—during a short period of the 2001 market downturn, according to iSuppli Corp.

The chip business has been impacted by short term events like market volatility, write-offs and price wars said Derek Lidow, president and CEO of iSuppli (El Segundo, Calf.), in a statement. "However, the long-term trend indicates that the semiconductor industry—which historically has been good at capturing profits in the electronics value chain—seems to have lost its money-making touch."

Lidow says the semiconductor industry's profit as a percentage of revenue has eroded steadily over the past four years, with quarterly net profits falling into the single digit range in 2008, down from 17 to 19 percent in 2004.

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