Semiconductor market on track for double-digit growth
LOS ANGELES, Oct 14 (Reuters) - The worldwide semiconductor market is on track to resume double-digit growth this year despite disruptions from the earthquake in Taiwan, research firm Dataquest said in a report on Thursday.
Global semiconductor sales are on pace to surpass $155 billion in 1999, a 14.1 percent increase over 1998, according to the quarterly industry update from Dataquest Inc., a unit of computer information specialist GartnerGroup Inc. (NYSE:IT - news).
The Sept. 21 earthquake in Taiwan killed more than 2,200 people and power outages temporarily idled much of the island's industry -- including its prodigious semiconductor supply sector -- but experts have been quick to note that the impact was limited and production was quickly returning to normal.
Dataquest said this year is expected to mark the first year of growth in the semiconductor industry since 1997 and the first year of double-digit growth in four years.
The current cycle is expected to last through 2002, with the market reaching $250 billion by 2003, as strong demand continues and overcapacity wanes, the research company said.
'Key drivers for the semiconductor market will continue to be communications equipment, consumer electronics, and PCs -- which in aggregate, account for about two-thirds of total revenue -- joined by automotive electronics,' Dale Ford, director of Dataquest's worldwide semiconductor applications group, said in a statement.
'The underlying megatrends driving high-growth semiconductor applications are the digital home, the global communications explosion, personal mobility, and e-commerce,' he noted.
Revenue for the global market for dynamic random-access memory (DRAM) chips is projected to lead the industry, growing from $21 billion in 1999 to $48 billion by 2003.
'We expect a DRAM shortage starting during the first half of 2000, which will cause a DRAM revenue surge that peaks in 2002,' Ron Bohn, director of research for Dataquest's semiconductor program. 'DRAM oversupply should return by 2003, however, causing DRAM revenue to decline.'
Semiconductor revenue in the Americas is expected to increase by 15 percent in 1999 to $52 billion, reaching $85 billion by 2003, the report said.
Asia/Pacific revenue should increase by 17 percent in 1999, with revenue at $36 billion, and the region is expected to post the fastest growth in the world -- both near term and long term -- with revenues forecast to rise to $61 billion in 2003, Dataquest said.
Japan, which has experienced slow demand for several years, should grow by 15 percent with revenue reaching $35 billion this year and continuing on to total $52 billion in 2003.
In the European region, semiconductor revenue is seen up 8 percent this year at $32 billion, rising to $52 billion by 2003, the research company said.
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