The wireless chip firms ARM and ST-Ericsson said they expect market to improve in the second quarter, helped by clients restocking, but said the rest of 2009 looked uncertain.
ARM, the world's leading chip designer, said chip sales had improved in the second quarter but due to customers rebuilding inventory rather than a recovery in consumer demand.
There are no underlying catalysts for people to go out and buy consumer electronics, said ARM's Chief Executive Warren East, speaking at the Reuters Global Technology summit in Paris.
Talking to customers we can see that Q2 is looking better. This improvement appears to be inventory correction and nothing more at the moment.
Britain's ARM, whose technology is used in more than 90 percent of the world's mobile phones, said the semiconductor market was coming back -- from a 30 percent drop in Q1 -- but would still be down by between 20 and 30 percent for the year.
It will be probably worse than minus 25 percent. There is an inventory bounce going on now but I don't think it will be sustained going into the back half, East said.
ST-Ericsson, the second largest mobile chip maker after Qualcomm, said it was seeing demand returning to a normal seasonal pattern after the inventory clean-up first quarter slump, but added the outlook was still very uncertain.
From Q1 on, the demand will follow the usual seasonal pattern. Visibility for the rest of the year, Q3, Q4, is still very poor, ST-Ericsson Chief Executive Alain Dutheil said at the summit.
The overall cell phone market saw its weakest ever quarter in January to March and the market is expected to fall 10 percent or more this year.
(Reporting by Paul Sandle, Georgina Prodhan and Tarmo Virki; Editing by Jon Loades-Carter and Hans Peters)