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'Katrina Effect' Could Cost Chip Market Billions

SAN JOSE, Calif. — The Semiconductor Industry Association (SIA) on Thursday (September 8) warned that the “Katrina effect” could potentially cost the worldwide semiconductor industry nearly $25 billion in overall sales growth.

Recently, the SIA (San Jose, Calif.) said strong competition in the computer and mobile phone markets contributed to downward pressure on chip prices in July, adding that rising global oil prices could soon affect the chip market (see Sept. 1 story).

At a press event on Thursday, Doug Andrey, principal analyst with the SIA, expanded on the trade group’s assertions and painted a hypothetical — and gloomy — scenario based on the potential loss of discretionary income in the United States alone due to soaring gas prices and the aftermath of hurricane Katrina.

The average discretionary income in the United States is $2,745 per household, according to the SIA. Oil prices could take away $1,475 of discretionary income per average U.S. household, according to the trade group.

This, in turn, translates to a total potential loss of discretionary income in the United States alone of some $126.6 billion, according to the SIA analyst.

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