Double-digit chip growth forecast for next three years
eetimes.com
By Brian Fuller
EE Times
(11/02/99, 2:12 p.m. EDT)
INDIAN WELLS, Calif. — Surging demand for systems and a revitalized
DRAM sector will push worldwide semiconductor sales up 50 percent in the
next three years with a slowdown not coming until 2003, the market-research
firm Dataquest Inc. reported this week.
At the company's annual forecast conference here, Ronald Bohn, director of
Semiconductor Research, said the industry should grow 14 percent this year,
17 percent next year and another 19 percent in 2001 to a total of $215 billion
in worldwide revenue. The figure is still short of the $300 billion level
executives predicted in 1995 the industry would reach by 2000 — before the
collapse in DRAM prices and overcapacity prompted industry recessions in
1996 (down 6 percent) and 1998 (down 8 percent).
Bohn said he expects growth in the U.S. to slow a bit but be offset by
resurgent economies in Asia and Latin America.
Returning to vigor and leading the charge for the other sectors is DRAM,
which fell from a peak of more than $40 billion in annual sales in 1995 to less
than $15 billion in three years. While nothing on the order of Windows 95
looms on the horizon to increase DRAM usage, performance demands and
the ramp of Rambus Direct DRAMs next year will help boost the sector to a
new peak of $63 billion in annual revenue by 2003, Bohn said.
If demand is just now coming in line with supply, capacity will remain tight
until 2003, when the next "bust" cycle should hit, he added.
Flash memory, whose sales have stagnated for four years, will resume
growth this year to nearly $4 billion in sales and double to more than $8 billion
in sales by 2003, Bohn said.
Of the applications driving semiconductors sales, PCs—the driver for the
1990s—is becoming less of a factor, according to Dale Ford, principal analyst
in the semiconductors group. Communications (14.1 percent growth between
1998 and 2003) and automotive applications (13.9 percent growth) will
outpace the PC's 11.8 percent growth and the consumer electronics sector
(8.5 percent), Ford said. Indeed, digital cellular applications are the
highest-volume semiconductor-rich platform in the game right now, he added.
Microprocessors will continue their strong growth (doubling from roughly $40
billion last year to 2002) but will be affected by PC price wars. "We've got
the squeeze on the microprocessor like never before," Ford said.
On the macroeconomic level, Greg A. Smith, chief investment strategist for
Prudential Securities Inc., said technology's increasing influence in economies
plus build-to-order practices that lower inventory should keep the GDP
humming for some time.
"Everyone has adopted the Dell model" of just-in-time manufacturing, Smith
said. "How do you have a classic inventory overhang recession with that
model? My argument is you can't."
He also dismissed fears about the impact of Y2K on economies, saying that
it may actually have benefits come the first week of January.
"Everyone will be walking around with one to five weeks' of excess in their
pockets" that they've saved to prepare for Y2K calamities, he said. When
nothing happens, "Jan. 3, 2000 begins the biggest impulse buying boom we've
seen," he quipped.
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