Internet is taking over from PCs as chip industry driver, say observers
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A service of Semiconductor Business News, CMP Media Inc.
Story posted 5:30 p.m. EST/2:30 p.m., PST, 6/9/99
By Jack Robertson
REDWOOD CITY -- At the Semiconductor Industry Association's release Tuesday of its semiannual chip industry forecast, Wilfred Corrigan, chairman of LSI Logic Corp., pointed to the exploding growth of the Internet market as supplanting the PC as the main driver for semiconductor sales (see June 8 story).
"Electronic commerce alone will be a huge driver, growing from $123 billion in 2000 to $400 billion in 2002," he said. "It will take an immense growth in Internet infrastructure to support e-commerce, which will lead the Internet to become the primary driver of the semiconductor market," the LSI chieftain said.
Corrigan told the SIA's mid-year gathering that the Internet's growth will fuel chip sales in all sectors of the electronic industry, especially communications and consumer electronics, as well as continuing to strengthen the PC market.
He went on to describe how much of the focus on the use of the Internet is reflected by the valuations of "dot com" companies. These valuations, he said, are predictors of the continuation of Internet traffic growth that will demand growth of the communiuciations infrastructure. "The electronic highway is paved with silicon chips," he said--a sentiment echoed today by Intel CEO Craig Barrett in announcing his company's revived plans to build a 300-mm fab in Hillsboro, Ore. (see today's story).
The supplanting of PCs as the primary market driver for chips was also predicted Tuesday at the Advanced Reticles Symposium in San Jose (see June 8 story). Klaus-Dieter Rinnen, principal analyst with Dataquest, the San Jose-based market researcher, pointed to the boom in communications, especially in wireless handsets, as eventually topping PCs as the spur for chip sales
Rinnen said the trend is already well underway. He cited the decline of the PC portion of the chip market, which dropped to 26.7% in 1998 from 31.8% in 1997, according to Dataquest. He said the decline came at the hands of a communications equipment market that grew to 17.7% last year from 16.4% the year before.
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