So how bad will it be? iSuppli says let me count the ways.

Dale Ford, senior vice president for iSuppli is quoted as follows:

"The semiconductor industry's growth cycle is shaped by six primary, interrelated forces—global economic health, electronic equipment production, chip supply/demand balance, capital investment, industry and individual company profitability and competition... All six of these areas will present challenges for the semiconductor industry in 2009."

Let's take a look at a few of these.

Global Economic Health --

The recession that began in the U.S. has become a global phenomena. This is impacting both consumer electronics and enterprise equipment suppliers. With declines in OEM factory revenues projected, semiconductors will feel the knock-on effect. iSuppli expects the result for semiconductors will be excess inventory, declining sales and downward pressure on prices. Indeed, they fear inventories at the end of Q4 2008 will expand by 268% over the Q3 level.

OEMs will continue to struggle to eliminate costs and conserve cash. Consumers are expected to exhibit the same behavior as the OEMs in terms of tightening up their finances. Both developments will cause the semiconductor manufacturers to see a decline in sales in 2009.

In terms of sectors, the situation in 2009 will range from bad to lack luster. iSuppli expects mobile PCs and LCD TVs to show low single-digit growth while other segments such as handsets and automotive electronics could suffer notable declines. Optoelectronics may show minor growth based on usuage of LEDs. Microprocessors and DRAM may do better than other sectors due to marginal growth in PCs though iSuppli is projecting a decline of 4% in 2009 compared to 2008.

iSuppli now expects unit shipments of 1G and 2G mobile handsets to drop more substantially in 2009 than previously thought. Shipments will fall by approximately 14% compared to an earlier forecast of a 1% decline. Desktop PC shipments are expected to decline by about 5% in 2009 compared to 2% growth expected before. Mobile PCs remain somewhat of a bright spot although the forecast increase of 15% has been pulled back from prior expectations of a 25% jump. Preliminary iSuppli forecasts show unit shipments of rigid disk drives in 2009 falling by about 11 million units compared to 2008. These declines in shipments will have the effect of depressing production of application specific standard products (ASSPs), application specific ICs (ASICs) and programmable logic devices (PLDs).