Chip sector boosts confidence

However, sub-prime clouds darken horizon for the PC and technology industries
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Recent news out of the chip sector has boosted confidence in the technology industry, however, the mortgage and debt crisis becoming apparent in the US and Europe still have the potential to upset the market according to analysts.

Peter Sutton, head of research at CLSA Asia-Pacific Markets has warned that the US sub-prime crisis will inevitably hit both corporate and personal spending and has said that high-cost luxury industries will be the hardest hit, with the PC and technology industry as a whole at risk. He however said that it is currently unclear how hard it will be hit.

He added that while worldwide sales of computers and mobile phones is and would likely remain strong in the near term, the fact that the majority of foreign markets rely heavily on exports to the US could cause a large slowdown in spending. The fear is that increased interest rates, higher amounts of foreclosures and spiralling bad debts could cause consumer spending to decline sharply at the end of this year, but stressed that the technology industry isn't showing any signs of trouble just yet.

Sutton said that by the end of this year, the sub-prime problem should become clearer with analysts being able to better analyse the risks that the PC and technology markets face in the coming months.

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