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SIA revises its chip sales forecast upward to 12.1% in 1999
A service of Semiconductor Business News, CMP Media Inc.
Story posted 4:15 p.m. EST/1:15 p.m., PST, 6/8/99
REDWOOD CITY, Calif. -- The Semiconductor Industry Association's global sales report, released
here today, showed that chip sales have rebounded at their highest growth rate since 1995.
The SIA has gotten more bullish since its last semiannual report. Overall growth of the
semiconductor industry this year is expected to be 12.1%, the best since the blistering 41.7%
growth of 1995. Last fall, the SIA predicted sales would grow 9.1% in 1999. Total sales in 1999
should reach $162.5 billion, compared with 1998's $140.8 billion.
The SIA expects this momentum to continue until at least 2002, when the market will total $215.7
billion. The trade group believes 2001 will be the year with the highest rate of growth--17.6%. That is
actually a bit less than last year's forecast of 18.2% growth in 2001 (see Nov. 11, 1998, story).
Wilfred J. Corrigan, oversight director for the SIA forecast and chairman of LSI Logic Corp., called the
slump of the previous three years "unprecedented," and attributed the downturn to overcapacity, tight
inventory management by OEMs, and the Asian economic crisis.
Now, however, the semiconductor market's recovery is being driven by the increasing pervasiveness
of the Internet and growth of electronic commerce, according to the SIA. In terms of product
segments, digital signal processors (DSP) and memory products are leading the upswing.
The Americas market will remain the world's largest for the next four years, representing about
one-third of the worldwide chip revenues. The Asia-Pacific markets (minus Japan) will make a big
comeback, emerging as the second-largest regional chip market in the next few years, predicts the
SIA.
Among product categories, analog is one of the fastest-growing, according to the SIA, which sees
that market increasiong by 50% from $20.7 billion in 1999 to $32 billion in 2002. The reason is the
global move to upgrade telecommunications networks to keep up with the growth of the Internet and
digital telecom technologies.
MOS logic will actually grow faster than the overall market this year, according to the chip
organization. The standard-cell market will nearly double between 1999 and 2002, while the
gate-array market will flatten.
Another market that will nearly double is microprocessors, accounting for $45 billion by 2002. The
PC still rules in the Americas market, said Corrigan, representing 40% of the world's MPU
revenues--"an indication of the PC culture here in the United States."
Even the notorious DRAM market will behave, according to the SIA's predictions. Corrigan hedged
slightly in saying that the market is expected to increase 25-to -35% annually during the next three
years. "The DRAM roller-coaster effect is occurring right now as the segment is expected to decline
24% this quarter," he said. Nonetheless, the SIA is expecting the global DRAM market to increase
25% this year."
Although the SIA is calling 1999 a year of recovery, the new forecast is still lower than what had been
predicted a year ago. The SIA's 1998 mid-year report, compiled with the World Semiconductor Trade
Statistics organization, projected chip sales growth of 17.2% in 1999 and 18.5% in 2000.
At that time, the WSTS called for the global semiconductor market to increase by 12.6% in 1999. By
the fall 1998, its forecast was 6.6%. During 1999-2002, the WSTS said last May, the world total
semiconductor market would grow at a compound rate of 14.2%, below the traditional 15.5%
long-term trend.
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