Today’s scenario is very unlike the plunge during the Financial Crisis, which blew over in no time.
This is an edited transcript from my interview with “This Week in Money” by HoweStreet.com. You can listen to it here.
Semiconductor sales have plunged about 22% from the peak last October. That peak was the end of a long spike that started in 2017. When you look at the chart, you see the surge in semiconductor sales that lasted for a year and a half. And then it’s just a straight line down essentially, back to July 2017 levels. And semiconductor sales have been stuck at these levels now for five months. Compare that to the 39% plunge during the financial crisis.
During the financial crisis, semiconductor sales fell off a cliff within a few months, and then bounced off instantly. It’s a perfectly V-shaped recovery. And a few months later they were back up. So this was just a disturbance in financial confidence, when you think your bank might not be open tomorrow, you’re going cancel your orders and see what happens. And once people figured out that’s not what was going to happen, things sort of went back to normal in terms of semiconductor sales.
But this time around, there is no sign of a V-shaped recovery. This time around, it has been five months in a row at these low levels, after plunging this far and very suddenly. So it’s a very different scenario. This is not a confidence-type scenario. There are some real issues there.