Recession could be good for innovation

The recession could actually have a positive effect on innovation, according to speakers at Semicon West 2009 in San Francisco.

Chip demand peaked 18 months ago and orders have crashed, but the downturn is forcing companies to make serious choices about which technology to back. With orders down, those companies with the money are spending on R&D rather than new production facilities.

"They used to say you couldn't go bust in the processor industry. Now we've had two," said Bob Johnson, vice president of research at Gartner. "What investment there is, is going to be in technological innovation, not increasing production."

Money is still tight in the sector, however. In 2007, a total of 17 companies were spending more than $1bn (£611m) a year on R&D and capital improvement, but this year only three made the list: Samsung, Taiwan Semiconductor and Intel.

Intel is positive about the current economic difficulties. Anand Chandrasekher, senior vice president of Intel's Ultra Mobility Group, said history had showed that tough times can be good for innovation.

Chandrasekher pointed out that the oil shock of the 1970s saw the invention of the mobile phone, while the early 1980s recession saw the birth of the PC, and the stock market crash of 1987 was followed by the invention of the World Wide Web.

"Recessionary periods mean companies look hard at their investments, and the bets they make will have a huge effect," he said. "Inventions in this period have enormous effect. I believe this one will be about converged communications and computing."