Fabless-Chip Companies Expect Big Rise In Demand
SAN FRANCISCO -- Thanks to the communications boom, a group of fast-growing chip makers expects chip demand to grow in double-digits for the next two years, according to an industry survey.
The Fabless Semiconductor Association, a group of 240 chip companies that don't own their own factories and that outsource manufacturing, expects demand for chip wafers, the underlying wafers from which chips are made, to increase 39% in 2000 and 48% in 2001, The Wall Street Journal reported Tuesday.
Sales increased 55% last year, well above an expected 43% rise, the Journal reported. The so-called fabless companies are strongest in the communications market, which is experiencing a boom driven by the growth of the Internet and cellular phones, said Mark Edelstone, an analyst at Morgan Stanley Dean Witter here.
As a result, Edelstone said contract chip makers, such as Taiwan Semiconductor Manufacturing Co., are more than doubling their capacity expansions this year. About 54% of fabless company sales are expected to be communications-related this year, compared with about 27% for the personal computer. That compares with 27% communications-related sales in 1999.
Fabless companies accounted for $12 billion of the world-wide semiconductor industry's 1999 revenue of $144 billion, the Journal reported.
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