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Global semiconductor market seen up 12 pct in '99
REDWOOD CITY, Calif., June 8 (Reuters) - The worldwide semiconductor market, recovering from the industry's longest-running downturn, is expected to grow 12.1 percent this year -- its biggest jump since 1995 -- according to an industry trade group.
The Semiconductor Industry Association said that total semiconductor sales are expected to reach about $140.8 billion in 1999, a jump of 12.1 percent over 1998, fueled by sales of PCs and other devices used for Internet access and e-commerce. That compares with an 8.4 percent decline in 1998 to $125.61 billion, according to year-end figures released in February.
''1999 will be the first double-digit year at 12.1 percent growth since the 41.7 percent spurt in 1995,'' said Wilfred Corrigan, chairman of specialty chip maker LSI Logic Corp. (NYSE:LSI - news) and oversight director of the forecast. ''This will also be the first year of recovery of the global semiconductor industry that we have seen since 1995.''
The SIA also predicted that the industry will grow an additional 15.4 percent in 2000 to $162.5 billion in revenues, 17.6 percent growth in 2001 to $191 billion and 12.9 percent growth in 2002 to $215.7 billion.
Both North and South America will remain the world's largest markets in the next four years, representing together about one-third of chip revenues worldwide.
Asia-Pacific, excluding Japan, will make a major comeback, emerging as the second largest chip market, as it sheds the effects of the Asian economic crisis that contributed to the 4.4 percent decline in that market last year.
Europe will follow Asia-Pacific and has bounced back as a significant player. The Japanese market is still being weighed down by its protracted domestic recession, the SIA said.
Microprocessors, the ''brain'' chips of computers, will again outpace the industry's growth and are forecast to climb 16 percent this year. This is good news for Intel Corp. (Nasdaq:INTC - news), which makes over 80 percent of the world's microprocessors.
Another area of growth will be the analog chip sector, which will grow 50 percent over the next four years to $32 billion in 2002, up from a projected $20.7 billion this year. Growth will be fueled by the need to upgrade telecommunications networks.
The SIA also predicted that the market for computer memory chips, called DRAMs (dynamic random access memory), is on target to increase about 25 percent this year despite a decline of 24 percent in the current quarter.
''No one segment so clearly demonstrates the volatility and cyclicality of the global semiconductor market '' as the DRAM sector does, Corrigan said.
The overcapacity in DRAM production and the ensuing slowdown were key reasons for the three-year industry slump. Other factors included the Asian economic crisis and tight inventory management by computer makers.
DRAM sales plunged to $14 billion in 1998, from nearly $41 billion in 1995.
The market for semiconductors had been hit in the past couple of years by manufacturing overcapacity that led to steep price drops in DRAMs and many other product areas.
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