STMicro economist sees semiconductor downturn in 2003
By Darrell Dunn
Electronic Buyers' News
(05/17/00, 04:02:38 PM EDT)
PARIS -- Although the semiconductor industry could experience growth of 40% or better in 2000 and 2001, companies should be prepared for the next downturn in 2003, STMicroelectronics' Jean-Philippe Dauvin said here today.
The next downturn will begin in the middle of 2002, leading to a 5%market decline in 2003, before a 4% rebound in 2004, Dauvin said at the Europartners Distribution 2000 Forum here.
The good news is that the emergence of the "e-society," manifested in mobile and connectivity products, will provide overall strong growth for the industry for the next 15 years, replacing the PC as the primary growth engine for the industry, he said.
"In the past 15 years, the maximum number of PCs shipped each year was 110-to-120 million," Dauvin said. "This year there will be 470 million cellular phones, 50 million set-top boxes, and 20 million DVDs shipped."
While the semiconductor content of applications such as cellular phones may total only $40, compared with $260 to $300 for an average PC, the greater volumes of e-society products will provide higher growth, he said.
Officially, Dauvin projects market growth of better than 30% for 2000 and 2001, although he said that historical market trends would indicate the growth may be closer to 40% for the next two years. Dauvin projected 28% to 35% growth in 2002.
Problems in the industry will continue to mount due to a lack of sufficient fab capacity, he said.
During the latest industry downturn, capital spending decreased from $43 billion in 1996 to $27 billion in 1998 due to fab shutdowns and project delays and cancellations. The industry is at a 94% fab utilization rate.
Dauvin said the industry fell below the required new fab capacity in 1998, and this year even if 15 fabs are built, that will leave the industry 15 fabs short of needed capacity. "Relying solely on foundries is dangerous," Dauvin added.
Trends that will drive growth for the next few years include cellular telephones, which will increase from 510 million subscribers in 1999 to 1.8 billion in 2005, and the "digital household." The number of Internet connected households is expected to grow from 60 million in 2000 to 260 million in 2005.
"The current upturn is driven by the e-society, mobility, and connectivity, and the current expansion is still young, and much stronger than the1993-1996 one," Dauvin said.
Dauvin, who also serves on the World Semiconductor Trade Statistics board, said growth in the first quarter of 2000 was led by flash memory, which grew at 200%, followed by communications ICs, at 59%, and differentiated ICs, such as digital signal processors (DSPs), at 37%. |
