Overcapacity looms despite IC growth in '03, says report
By Mark LaPedus , Semiconductor Business News
Apr 28, 2003 (5:35 PM)
URL: siliconstrategies.com
SAN JOSE -- The IC market is getting off to sluggish start in 2003, but it may get worse for chip makers: Overcapacity could haunt the industry for the next five years, according to a new report from Electronic Trend Publications Inc. (ETP) issued today (April 28).
But despite the gloomy outlook from ETP, the San Jose-based market research firm still believes the IC market will grow 10 to 12 percent this year, from $120.5 billion in 2002, to $133.1 billion in 2003.
The IC market is also expected to fall from $153.5 billion in 2004, to $142.3 billion in 2005, but will rebound and grow to $154.1 billion in 2006, to $169.5 billion in 2005, according to ETP.
ETP's outlook differs from the bullish forecast given by the Semiconductor Industry Association (SIA) of San Jose. On Monday (April 28), the SIA gave a bullish talk to analysts, but still ended up in revising down the forecast for chip market growth in 2003 (see April 28 story ).
“Although ETP believes that the semiconductor industry should achieve 10-12 percent IC unit and revenue growth in 2003, the year has not started well,” according to ETP. “Uncertainty caused by the Iraqi war, the SARS epidemic, and a general lack of enthusiasm for IT investment by businesses has created an economic situation that could go into many directions,” the report said.
The “early indicators in 2003--such as spot-market DRAM pricing--are not favorable. ETP believes that endemic overcapacity will limit the industry's pricing power over the next five years,” according to the report.
“More importantly for the long term, the next driver of the electronics revolution has not appeared,” the report said. “Replacement sales of PCs and cell phones will not be sufficient.”
There is some good news, however. “Fortunately, unit growth should lead to some revenue growth,” it added.
Indeed, IC demand is expected to move at a compound annual growth rate of 10.6 percent from 2002 to 2007. IC units are expected to grow from 78.6 billion units in 2002, to 88.5 billion in 2003, to 102.3 billion in 2004, to 105.5 billion in 2005, to 117.5 billion in 2006, to 130.2 billion in 2007, according to the report. |
