November 23, 2001
STMicroelectronics Economist Predicts
Semiconductor Industry Growth in 2002
PARIS -- The chief economist of
STMicroelectronics NV, Europe's largest chip
maker, said the semiconductor industry is beginning
to show signs of turning around, with double-digit
growth coming by the end of 2002 and a broader
rebound in 2003.
Jean-Philippe Dauvin, a veteran of the industry, is
predicting roughly 0% growth for the sector in 2002.
But, he expects momentum to pick up by the end of
next year, with a 20% or 25% increase in revenues
in the fourth quarter of 2002 compared to the
current quarter. The chip industry could see growth
in the "high 20s" in 2003, he said.
A company spokeswoman said nothing has changed from the forecasts STMicroelectronics has discussed with analysts and investors since its earnings announcement last month. But Mr. Dauvin's latest comments offer a broad view of how the French-Italian chip maker sees the sector performing over the next two years.
Mr. Dauvin, STMicroelectronics' corporate vice president for education and knowledge, said analysts often ask him whether the industry has started its cyclical upswing. At the moment, his response is positive but cautious. "In the fourth quarter, we are going to the station" from the train yard, Mr. Dauvin said. "The trough has been passed."
His latest forecasts are roughly in line with those of other analysts who cover the battered semiconductor industry, though they are slightly less optimistic than some. Technology-research firm Gartner Dataquest, for example, estimates global-chip revenues will rise 3% next year and jump 30% in 2003. (That compares to a 35% drop this year, according to Gartner Dataquest.)
Forecasts by STMicroelectronics and sector analysts have been extremely unreliable throughout the downdraft of the past year. In 2000, STMicroelectronics had predicted a 25% to 30% expansion in the semiconductor industry for 2001. Its scaled-back forecast of 8% growth made last January was still way off the mark.
Mr. Dauvin sees an exit to the current slump through a pickup in business spending on technology, among other things. He said companies' desire for higher productivity combined with low interest rates that encourage capital expenditures mean companies will invest in new high-tech equipment that uses semiconductors.
"Inventories are over [for the chip sector], demand is picking up, prices are down," said Mr. Dauvin. He said low semiconductor prices are a key element missing for a recovery by chip makers. But he predicted prices would start bouncing back next year.
Mr. Dauvin declined to give specific growth forecasts for STMicroelectronics. Chief Executive Pasquale Pistorio last month predicted flat sales in the current quarter compared to the previous three months, and declined to give company forecasts for next year. At the same time, he repeated the company expects to fare better than the overall sector. Mr. Pistorio estimated that STMicroelectronics' revenues will fall 16% to 20% this year. |
