SiliconBeat

You know a stock index is in deep trouble when the best stock performance by one of its constituents is a loss of 4.3 percent. That’s the story with the Philadelphia Stock Index, known to us by the shorthand SOX. The best stock among it was the Irvine chip maker, Broadcom, whose stock dropped a mere 4.3 percent Wednesday, but that was a small enough drop to make it the bright spot among the stocks that make up the SOX, which itself fell 7.7 percent Wednesday to its lowest point in twelve years.

The chip sector, which has lost more than half its collective market value so far this year, was battered today by a projection from the Semiconductor Industry Association that chip sales next year are likely to fall next year to $246.7 billion, down 5.6% from this year’s anticipated sales of $261.2 billion. Sales this year are expected end up about 2.2% from 2007.

Consumer spending, or the expected lack of it in the current economic downturn, is the culprit.

”The current global economic turmoil is clearly having a significant impact on semiconductor sales,” said SIA President George Scalise. “The fortunes of the semiconductor industry are increasingly tied to consumer spending on electronic products. Consumer purchases now drive well over half of worldwide semiconductor sales.”

The report followed news earlier this week from SEMI, the industry group for the makers of the costly equipment used to manufacture chips, that showed orders in October actually grew for the first time in eight months, but off of an even lower figure in September than originally reported.

The industry group was yet to crow about that growth yet, however.

“While three month average bookings improved in October, overall bookings and billings for North American equipment manufacturers are at levels comparable to 2003,” said Stanley T. Myers, president and CEO of SEMI. “Our industry will have to look to the early part of 2009 for clearer signals of market direction.”

But