Riding Out the Recession

By: Stephen Las Marias, Editor
( 1 Jan 2009 )

Despite having what the Chinese consider the lucky number, eight—which signifies prosperity, the year 2008 proved to be anything but lucky. Throughout the past 12 months, the whole world had been battling economic and financial crises of such magnitudes that even some of the toughest firms in Wall Street weren't able to weather. Starting from the real estate issues and credit crunch in the United States, the financial turmoil has spread its wave of effect worldwide, mostly affecting the banking and investment sectors. This inevitably reached the manufacturing sectors, which mostly needed bank loans to finance their capacity expansion activities or increase their capital.

To ward off or cushion the effect of the financial turmoil, leading companies in the high tech industries have been busy cutting and restructuring their workforce. IBM Asia-Pacific, for one, will let go 2,600 employees—1,000 workers in Japan and 1,600 elsewhere across the region. Cadence, on its part, will cut 12 percent of its workforce or around 625 jobs. AMD, after laying off 1,600 employees last April, is set to further reduce its workforce by cutting 500 jobs as part of its restructuring plan. Intersil is likewise reducing its workforce by 9 percent. HP, meanwhile, has the largest job cuts announced so far. The company plans to cut around 24,600 of its workforce over the next three years, with nearly half of the number to come out of its U.S. base. Siemens AG, meanwhile, will cut 16,750 positions to save $1.9 billion.

ST-NXP Wireless, the STMicroelectronics-NXP Semiconductors joint venture company that eventually became fully owned by ST after it bought out NXP's share, merged with Ericsson Mobile Platforms (EMP) to increase its market share in the wireless industry and target competitors in the mobile semiconductor market. However, even before the merger with EMP, the company has already planned to reduce its global workforce of 7,500 by laying off about 500 people.

Other companies include Freescale Semiconductor, which plans to cut at least 2,400 of its global workforce; National Semiconductor, which says will reduce its workforce by 5 percent to cut cost; Qimonda, which is cutting about 3,000 jobs worldwide; Xilinx, which has reduced its manpower by cutting 250 jobs; Texas Instruments, which plans to sell its cellular baseband operations; and handset makers Motorola and Nokia, with Motorola reportedly planning to lay off 3,000 workers, and Nokia cutting 600 jobs, among others.

In the wireless industry, one observation from market research firm iSuppli Corp. is that the once almost-unstoppable growth in mobile device shipments and revenues is coming to a halt as wireless subscribers around the globe extend the lifecycles of their existing devices in response to these difficult economic times. According to iSuppli, the mobile device market contracted slightly in the third quarter of 2008, ending with 316.7 million units, 1.1 percent lower than the previous quarter. The market analyst reports that mobile handsets, which account for the vast majority of this segment, achieved about 311 million units in the same period, down 0.3 percent sequentially. This has led iSuppli to lower its forecast of global mobile device shipment growth to just around 8.9 percent in 2008, down from the initial 10.4 percent.

In a statement, Tina Teng, senior analyst, wireless communications, for iSuppli, says the outlook for 2009 is even gloomier than for 2008. She notes that with the United States, Europe and Japan entering recessions, economic uncertainty and waves of layoffs mean that consumers are likely to spend less on mobile products.

Europe, in particular, has become the first ever mobile market to feel the blow of the ongoing credit crunch. According to market analyst Ovum, third quarter results from Europe's top mobile operators showed deterioration in their performance, which can be highly attributed to the current financial turmoil.

WHAT'S IN STORE FOR 2009?
The past year indeed has brought so much shakeup in global markets. On the other hand, one could not deny the fact that there were also a lot of "highs" despite the "lows" throughout the whole year.

For instance, in the consumer market, the successful launch of Apple Inc.'s iPhone 3G. Regardless of global recession talks and market uncertainties in the coming year, people flocked and camped at Apple stores just to get their hands on the new version of the well-regarded "smartest of all smartphones". That's probably one of the highlights I could point out that can be somehow considered the lighter side of what was in 2008.

In our January-February 2008 issue, I wrote something about WiMAX on my Comment piece. I reflected on Sprint-Nextel and Clearwire calling off their WiMAX plans just before the year 2007 ended. Many industry observers at the time considered the breakup a big blow to the much-hyped broadband technology by slowing its momentum, and confirmed the riskiness of the technology.

In that piece, however, I mentioned that the breakup is NOT a setback for the technology, given the number of collaborations for product development and testing, trials, and deployments already happening at the time. In April, the WiMAX Forum announced at the WiMAX Forum Congress Asia 2008 the first batch of mobile WiMAX certified products—four base stations and four subscriber unit modules—from Forum member companies POSDATA, Runcom Technologies, Samsung Electronics and Sequans Communications. All throughout the year, the WiMAX Forum has been certifying more mobile products to WiMAX standards, thereby boosting the overall mobile WiMAX ecosystem.

The biggest news in relation to WiMAX, in my opinion, came in May, about six months after Clearwire and Sprint-Nextel scrapped their plans to jointly build a nationwide WiMAX-based network. The two companies, aided by a total of $3.2 billion in combined investments from Intel, Google, Comcast, Time Warner Cable, and Bright House Networks, have resurrected their plans to build a new wireless communications company, which will be named Clearwire and will focus on expediting the deployment of the first nationwide mobile WiMAX network. True enough, 2008 marked the year of WiMAX when in September, Sprint-Nextel and Clearwire launched their Xohm WiMAX service (now called Clear), in Baltimore, Maryland, in the U.S.

These two newsmakers in the high-tech sector (which is among the many others)—iPhone 3G and the WiMAX launch in the U.S.—are just some of the industry trends that somehow keep me hopeful of a rebound in global markets this year. Sentiments continue to lean toward further recession, but I believe we can ride it out slowly but surely. It is still worth striving to move forward and be the best—and we at Wireless Design and Development Asia intend to do so.

The year 2009 has the number nine, which, in loosely Chinese belief, could mean "forever" or "for a very long time". Therefore a recession this year will definitely mean bad. Other industry analysts even expect recovery to start around 2010. In 2008, the "prosperity" part did not happen; I believe the same will happen this year, that the recession will not be around for a long time and that these turmoil and crises will disappear really soon. So here's to a prosperous New Year to each and everyone us!