To All: Some good news,
Little Impact on Semiconductor Equipment Sales Says
The Information Network
November 14, 1997
WILLIAMSBURG, Va.--(BUSINESS WIRE) via Individual Inc. -- The financial crisis going on in Asia and Latin
America will have little impact on the Semiconductor Equipment market, according to The Information Network, a
Williamsburg, VA-based market research company.
"Asian companies have struggled to grab first place in the DRAM market over the past few years," notes Dr. Robert
N. Castellano, President of The Information Network. "They have been operating at 100% capacity, maintaining
profitability even at dramatically lower DRAM prices. For them to cut back now on expansion of technology for
next-generation devices -- with 0.25 micron feature sizes on 300-mm wafers -- will probably relegate them back to
second place behind the Japanese on the 256-Mbit DRAM race.
"Companies are pushing to 0.25 micron feature sizes, so that the next wave of buying will be technology driven
rather than capacity driven. The drop in DRAM prices in 1996 was partly due to companies trying to increase market
share by increasing production. These companies certainly will not backtrack in 1997 and 1998, and they will try a
new route to market share gain - invest in new fabs that are capable of producing 256-Mbit DRAMs," notes Dr.
Castellano.
"While the financial crisis has a macroeconomic effect on the entire Asian economies, it is the technology sector that
is moving these countries out of a 'third-world' morass. It would be a financial blunder for the Asian governments to
allow its semiconductor companies to lose market share. Many Asian governments are funding fab construction.
"The continual DRAM price erosion will seriously effect only one company -- Micron Technology, which only
makes DRAMs. South Korean DRAM manufacturers Hyundai and Samsung both announced plans in March to
diversify into ASICs. Taiwanese companies UMC and TSMC are foundries, making chips for other companies --
primarily U.S. and Japan -- and are planning their foray into the 300mm arena before 2000.
"Many of the new fab announcements in Asia have been made either by UMC and TSMC in Taiwan, or by Asian
companies partnered with a U.S. company, such as the $1 billion Singapore fab agreement between Hewlett-Packard
and Chartered Semiconductor Manufacturing or the formation of TI-Acer in Taiwan between Texas Instruments and
Acer. So, while the DRAM market dropped 16.9% in 1997 to $20.8 billion, unit shipments actually increased 10%,
which is good for PC manufacturers and good for consumers while at the same time keeps fab utilization high.
"The Japanese have continued to rebound during the past few years, and are eager to regain their dominant position in
DRAM manufacturing. The expensive Yen and battered Japanese economy is pushing DRAM manufacturers offshore
-- NEC to a second facility in Roseville, Calif. and Hitachi to Singapore and Malaysia via joint partnerships.
"All these factors are pointing to a growth of 13.7% in semiconductor equipment in 1998 as we said in our release of
November 4," points out Dr. Castellano.
The Information Network is a leading consulting and market research company addressing the semiconductor,
computer, and telecommunications industries.
CONTACT: The Information Network | Dr. Robert N. Castellano, 757/258-3738 |
theinformationnet.com | E-mail - tin@theinformationnet.com |
