==Old news repeated by the SIA== Global Semi sales seen up 12.1 pct in '99
6/8/99 7:33 PM
By Therese Poletti
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 the industry's 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 personal computers and other devices used for Internet access and conducting electronic commerce.
''1999 is the first year of the cyclical upturn,'' said Wilfred Corrigan, chairman of the specialty chip maker LSI Logic Corp. and oversight director of the SIA forecast. ''1999 is the year of the Internet.''
Corrigan told a lunch to announce the results that the SIA had raised its 1999 forecast to 12.1 percent growth, up from 9.1 percent previously, to reflect the strong demand this year for semiconductors, even amid a big drop in memory chip prices this quarter. He also said that 12.1 percent growth is consensus and that he believes growth may come in stronger.
Last year, the industry's total revenues dropped 8.4 percent to $125.6 billion.
''It's confirming that this is the year for coming back,'' said Hans Mosesmann, an analyst at Prudential Securities. ''It's good for semiconductor stocks and it's good for the industry.''
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 in 2001 to $191 billion and 12.9 percent in 2002 to $215.7 billion.
North and South America will remain the world's largest market 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 used in personal computers.
The microprocessor category also includes embedded microprocessors for specific devices and system-on-a-chip processors, which combine more functions onto one processor.
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, 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 sharp decline of 24 percent in the current quarter.
''No one segment demonstrates the volatility and cyclicality of the global semiconductor market than DRAMs,'' Corrigan said. ''There are three certainties in life, death taxes and the global semiconductor industry's cyclicality. We've just got to accept that fact.''
The overcapacity of memory chip production and ensuing price cuts were among the key reasons for the three-year industry slump. Other factors included the Asian economic crisis and tight inventory management by computer makers.
Corrigan said that the PC industry had been trying to move to the Dell Computer Corp. model of buying components as needed and keeping inventories very low. This model worked when there was too much inventory and chip makers were slashing prices.
''You had component suppliers willing to stand outside your plant willing to rush in whenever you needed them,'' Corrigan said. ''But as components get in thin supply, I think the Dell model is going to break down.''
DRAM sales fell to $14 billion in 1998, from nearly $41 billion in 1995. |
