LONDON, UK: At the Future Horizons' International Forecast Seminar (IFS) in London, Malcolm Penn, CEO and founder, said that the global semiconductor market will fall by 28 percent in value and by 26 percent in unit shipments in 2009 after the unprecedented collapse of Q4 2008.

That set me thinking: is the global semiconductor industry's situation really so bad? And, what of the Indian semiconductor industry? Does it need to re-look at its semiconductor policy as well? To get answers to these questions and more, I went straight to Malcolm Penn. Excerpts from an interview:

CIOL: Isn't a 28 percent drop too high? Or, is the industry situation really that bad?

Malcolm Penn: Afraid not, it could even be lower, but remember that this is a year on year number.  It is based on the following assumptions: Q4-08  down 22.5 percent vs Q3-08; Q1-09 down 20 percent vs Q4-08; Q2 down 2 percent vs Q1; Q3 up 12 percent vs Q2; and Q4 up 3 percent vs Q3!
 
If this pattern runs true, 2010 will be up 28 percent vs. 2009!
 
The actual Q4 results (released on last Sunday) were down 24.2 percent, slightly worse than our estimate.
 
CIOL: The current industry situation was fuelled by greed and short term business goals. Who were the culprits? Weren't they warned earlier?
 
MP: It was more complex that that! The woeful state of the world economy was a consequence of debt, greed and irresponsibility; political self interests and short term business goals aided & abetted by compliant governments; ineffective regulators; imprudent institutions; incompetent management; irrational self delusion and vested self-interests. 

No one is blameless for this crisis! Concerns were raised, but the human nature is often irrational and the 'easy option' is always the one of choice.
 
CIOL: What needs to be done to get the buzz back in the semiconductor industry?
 
MP: Short-term, rebuilding confidence! Longer term, a radical return to 'old fashioned' business and political values!
 
CIOL: How is the EDA segment doing?
 
MP: No better, no worse than normal, technology marches on, new designs accelerate in a downturn.
 
CIOL: When can we expect some recovery in NAND? Will the various government interventions help? Qimonda's story is well known.
 
MP: NAND will recover when excess capacity abates, and that will take several more quarters. The government interventions won't help, rather the opposite! It will exacerbate the excess capacity issue.
 
CIOL: You have predicted a recovery in 2010 with the resumption of growth in Q3 2009. What will make this happen?
 
MP: A recovering world GDP growth plus a return in business confidence.
 
CIOL: Will fab spends also look up during the growth period as above?
 
MP: Not until Q1-2010 at the earliest.
 
CIOL: China is also set to see negative growth of 5.8 percent in 2009. How much will this impact the global industry?
 
MP: I assume you mean the semiconductor market growth in China. Well, for semiconductors in 2009, -5.8 percent is a darned sight better than -28 percent, so this would be a high growth market (relatively speaking).
 
CIOL: Do you think 2009 will be defined more by growth in MEMS, LEDs and GPS products? If so, why?
 
MP: All markets, all customers, all regions, all applications, all products are affected.

CIOL: How do you see semiconductors in India shaping up? Do you feel it is a key destination for overseas players. If not, why not, and what has changed that?
 
MP: I think India needs to rethink its semiconductor strategy. It cannot survive on chip design alone.