The market for electronics gas-affiliated equipment is apparently in tears, according to a report by the Gas Review.

Furthermore, a lengthy cooling-off of the market is anticipated and could result in significantly decreasing demand for electronics and specialty gases.

The nightmare return of the IT slump of 2001-2002 could actually become a reality, as the market slips into a situation whereby the in the worst case scenario, it may in fact be reduced by half.

The past three years has seen the semiconductor market move along comparatively firmly, yet demand has taken a turn for the worse since Spring 2008, the Gas Review notes.

Both production and orders received have ‘greatly fallen off’ and while a recovery in the latter half of the year had been expected, this appears not to have been the case.

The special demand for LCDs and PDPs caused by the Beijing Olympics is not thought to have matched expectations, with the global financial crisis which hit in the final quarter also to blame for the slump.

Chip fabs for the digital home appliance market were hit by the slump in end-user products, as a result of the economic downturn, while even in Japan the operational ration of fabs producing semiconductors for use on cars fell substantially as of July 2008 – ahead of the drop in vehicle production and sales.

With so many factors combined, capital investment is believed to have been moving towards a crucial stage of either postponement, contraction or even cancellation for the semiconductor industry.

Construction of new plants has been postponed and furthermore, some existing plants have been under the threat of temporary closure.

The market trend in Japan for electronic gas devices and installation for 2008, shows a drop of 40% for use with semiconductors, a slight growth for LCDs, a solid showing for compound semiconductors, and a slightly positive figure for solar cells.

As a result, a forecast calls for an overall drop in the market of around 30% - amounting to Y49bn and falling below the Y50bn level for the first time since 2002. Concern reigns for an even greater drop in the future, though largel y circumstantial.

Such a cooling-off of the market like this is the first such scenario since the IT slump which was endured for a two year period from 2001-2002. The fact that the markets of Taiwan and Korea are maturing does not help matters either, as growth potential is ever limited and the electronics gas markets in these countries are ‘disappearing’.

With the cooling-off of consumption, caused by the global economic downturn, the slump in semiconductor and electronics gases could well be heading towards a crunch point.