It's not going to be 2001, they say. And the optimists have some valid arguments. First, the nature of the crisis for the tech world is not akin to the cliffhanger that we witnessed seven years ago. We have in fact seen a slowdown in some of the key electronics markets throughout the year.

Second, while the epicenter of this crisis is in the banking industry, technology companies don't seem to face any imminent danger of capital dearth. Many semiconductor companies and electronics OEMs are cash-rich and are not exposed the high-leverage, high-risk model that is now haunting Wall Street.

Our sister publication EE Times recently reviewed the balance sheets of some large chip firms and OEMs, and found out that many of them have huge amounts of cash and short-term securities and limited debt, which will allow them to withstand the downturn.

Reality check
But the optimism only goes that far. Electronics is not likely to escape the ills of this ongoing financial saga. The memory industry, for instance, is bracing for yet another grim outlook.

Although Intel Corp. and Advanced Micro Devices Inc. have posted better-than-expected Q3 results, Intel is not so sure about the 2009 outlook. According to Intel's CEO Paul Otellini, "who knows what 2009 is going to be?"

Given the chain of events that engulfed the world economy over the last three months, industry observers are cautious with their predictions. Then there are shadows of consolidation all over the silicon world. We are already witnessing that in the wireless chip sector.

Nearly all sectors in the semiconductor industry are expected to see sales and demand declines for this quarter and perhaps until the early part of 2009. And this on top of the fact that profit margins of semiconductors have been on the decline for some time.

Katsuhiro Tsukamoto, president and chief operating officer of Renesas Technology Corp., recently said that the economic crisis in the United States and elsewhere could have a severe effect on the worldwide semiconductor industry.

The economic woes that initially affected the U.S. are now spreading to Europe and Asia. And two of the critical challenges—confidence and consumer spending—are intrinsically linked to each other in all these markets.

While predictions are hard, they seem harder this time around when every passing day brings some new dimension of the economic turmoil. These are all signs that 2009 could be a challenging year for the electronics industry.

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