More doom and gloom is in store for the semiconductor industry as the economy shows no signs of getting better and many analysts predict things are going to get worse yet.

Gartner Inc. released a statement today that shows global semiconductor sales will decline by 16% in 2009 thanks to the economic slowdown, which has led to decreased consumer spending and decrease in orders from manufacturers.

Gartner expects total semiconductor sales to decline to $219.2 billion. Last month, Gartner predicted that the global semiconductor market would decline by 2.2%. Preliminary numbers from the research firm show that 2008 revenue has declines 4.4% compared to the $261.9 billion the global semiconductor market generated in 2007.

Gartner said, "The financial crisis is having an unprecedented negative impact on fourth-quarter 2008 sales and profits, surpassing the 20 percent decline record set in the second quarter of 2001."

The research firm predicts that sales this quarter will plunge 24% compared to the previous period. 2009 could be the first year on industry history that two consecutive years saw revenues decline. Gartner isn’t alone in predicting a bad year for the semiconductor industry in 2009. Bloomberg reports that analyst firm SIA expects sales to drop by 5.6%, the first decline since 2001.

Most think of CPUs when the word semiconductor is mentioned, though semiconductors include DRAM technology as well. The DRAM market abroad is in dire financial straits with many smaller companies, and even some of the larger ones drastically cutting output. Some of the smaller firms may be forced out of the business altogether or forced to merge to maintain viability. The Taiwanese government is even looking at issuing loans to help solidify its national DRAM business during the financial crisis.

Gartner VP Andrew Norwood told Bloomberg, "(the DRAM) market is so bad that suppliers must either significantly scale back supply, or the weaker players will be forced into mergers or bankruptcy. (Gartner is) Expecting DRAM pricing to firm during the second half of 2009, and this has the potential to moderate the decline in 2009 semiconductor revenue.''

Gartner says that with all of the profit warning, 2009 will be a very weak year across the industry. Analyst Raffaella Sommariva said, "After all the profit warnings, 2009 will be very weak."

AMD is one of the hardest hit firms in the semiconductor business. AMD announced in early December that it was cutting profit projections by a massive 25%. The same day AMD announced that it was cutting its ownership in the foundry spin off that resulted from splitting its design and manufacturing arms.

AMD originally owned 44.4% of the new company along with investors from the Middle East. The new arrangement has AMD selling a further portion of its ownership in the Foundry leaving it holding 34.2% of the new company. The deal brought AMD $700 million in investment from ATIC, one of AMD's partners in the Foundry spinoff. With all of the trouble, surrounding AMD, and other companies in the semiconductor industry many wonder how much longer some of the firms can hold out.