Mid December 2008 we issued a note discussing how the downturn of 2001 could compare with what might
happen in 2009. Given the more complete set of graphs and data in this report, which are included to help
illustrate our thoughts, we have included the commentary from this other note below:
How Might 2009 Compare With The 2001 Downturn For Technology Companies?
We think that in many ways 2009 may prove to be better for technology than 2001 was, though economically,
2009 could well be weaker.
• Weaker economic outlook in 2009. Wachovia’s economics team is expecting 0.8% year-over-year real
global GDP growth in 2009, compared with 2.5% year-over-year growth in 2001.
• Communications and computer infrastructure overbuild in 1999 and 2000. We believe that there
was a substantial overbuild of communications infrastructure and computer infrastructure in 1999 and
2000. This had a large and long-lasting impact on telecommunications infrastructure companies,
enterprise computer companies, and communication chips. We believe that there is no comparable
overbuild of technology infrastructure leading into the current downturn.
• Inventory and relative growth. In 1999 and 2000, there was a buildup of inventory in some segments
of the electronics supply chain, most notably with contract manufacturers (rising to 70+ days by the end
of 2000 from 30+ days of inventory in early 1999), creating an excess inventory issue that exacerbated
the demand weakness in 2001. Our data do not show any comparable inventory build leading up to the
current downturn. Also, from a structural point of view, the electronics supply chain as a whole appears
to have developed a preference for holding less inventory at systems original equipment manufacturers
(OEM) and distributors and more at component companies, which we think creates a more stable
environment in a downturn.
• Timing--a weak Q4 2008 helps 2009/2008 comparisons. We would put the beginning of the big plunge
in demand in the current downturn to be in Q4 2008, as compared with Q1 2001 in the prior downturn.
This can be seen in the PC, handset, and semiconductor data. As an example, in November 2000,
worldwide semiconductor sales were up 15% year over year (a strong positive number, although
admittedly, a fairly large deceleration from 30-50% growth in the prior months), and fell to a 6% yearover-
year decline in January 2001. In November 2008, worldwide semiconductor sales were down 23%
year over year. Therefore, the 2009/2008 growth comparison should be helped by having a segment of
2008 that was very weak and potentially, some degree of recovery to the end of 2009. In comparison,
2000 was overall a strong year right through to the very end and in 2001, the downturn ran its course
through the entire year.
• Capacity. In 2000, the semiconductor industry’s heavy investment in capacity continued right into the
onset of the downturn , with the ratio of semiconductor equipment purchases to semiconductor sales
peaking in March 2001 at 31%. In 2007 and 2008, starting more than a year ahead of the sharp drop in
semiconductor sales in October 2008, the ratio of semiconductor equipment purchases to integrated
circuit (IC) sales fell to close to 10% by October 2008 from a local high of about 24% in mid 2007.
Our expectations for growth in 2009. Figure 4 contains our projections for 2009 growth. We compare these
with 2001.
• Worldwide semiconductor sales. We are expecting a 5-15% decline in 2009, compared with a 32%
decline in 2001. The 32% drop in worldwide semiconductor sales in 2001 was a fair amount larger than
our projected decline of 5-15% in 2009. We discuss this in some detail in the text that follows.
• Worldwide PC unit shipments. We are expecting a 0-5% unit decline in 2009 (excluding netbooks),
compared with a 4% decline in 2001. We expect a comparable decline for worldwide PC unit shipments
(0-5%) to what happened in 2001 (a 4% decline). We think that secular growth in demand for notebooks
will help support PC sales. We think that netbooks sales could be a source of incremental demand for PC
makers and PC chip suppliers.
• Worldwide handset unit shipments. We are expecting a 0-10% unit decline in 2009, compared with a 3%
decline in 2001. We think that worldwide handset shipments could decline more in 2009 (a 0-10% decline)
than in 2001 (a 3% decline), given that the handset market is more mature, with higher worldwide penetration.

TABLE OF CONTENTS
How Might 2009 Compare With The 2001 Downturn For Technology Companies?.......................................................................... 5
Pulse Of Technology........................................................................................................................................................................... 7
Growth Projections............................................................................................................................................................................ 10
Semiconductors................................................................................................................................................................................. 11
Capital Spending And Capacity ................................................................................................................................................. 14
Microprocessors......................................................................................................................................................................... 19
Memory...................................................................................................................................................................................... 32
Taiwanese Monthly Semiconductor Sales ................................................................................................................................. 37
End Markets ............................................................................................................................................................................... 39
Inventory ........................................................................................................................................................................................... 40
Computers ......................................................................................................................................................................................... 50
Desktops ............................................................................................................................................................................. 56
Notebooks ........................................................................................................................................................................... 58
Servers ................................................................................................................................................................................ 60
Wireless Handsets ............................................................................................................................................................................. 66
Economic Data.................................................................................................................................................................................. 69