BB, DD & All,
News on Dauvin's view for the coming years.
SGS-Thomson sees chip mkt up to $151 billion in 98
PARIS, Jan 21 (Reuters) - SGS-Thomson Microelectronics NV's <STM.PA> chief economist said on Wednesday he expected world semi-conductor industry sales to rise by nine percent to $151 billion in 1998.
Jean-Philippe Dauvin said growth could pick up in the second half of 1998 because the Asian crisis would prompt many producers, especially in that region, to hold back on investments, reducing current overcapacity.
He said he expected the industry would cut its 1998 capital expenditure plan by an estimated $20 billion.
Company Chairman Pascuale Pistorio said that SGS-Thomson still planned to go ahead with a new eight-inch semiconductor plant in Italy, which will employ about 1,000 people and start production in 1999.
He added, however, that the board had not yet decided on its precise location nor given its final go-ahead to the investments.
10:07 01-21-98
Copyright 1998 Reuters Limited. All rights reserved.
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SGS-Thomson<STM.PA>sees nine pct 1998 market rise
PARIS, Jan 21 (Reuters) - SGS-Thomson Microelectronics chief economist Jean-Philippe Dauvin on Wednesday said the Asian crisis could be a blessing in disguise for the semiconductor market by cutting overcapacity.
Dauvin told a news conference he expected the world semiconductor market to grow by nine percent in 1998 over the 1997 level, to $151 billion. In 1997, growth was four percent after a 12 percent fall in 1996.
But the 1997 growth figure was a result of a 16 percent growth in units and a 12 percent drop in prices, due to overcapacity in memories and production.
Dauvin estimated that 1997 had seen a 25 percent overcapacity in Dynamic Access Random Memories (DRAM) and six percent in overcapacity in microcomponents.
He said the effect of the Asian crisis would be a slowdown on domestic demand and electronic equipment sales.
The impact on the world semiconductor market was a downgrade of growth forecasts to nine percent, from estimates of 15 percent last October, he said.
But growth would resume due to a gradual move from overcapacity to undercapacity in the second part of 1998, he said.
Capacity expansion plans to the tune of some $20 billion were postponed or cancelled and capacity would be in line with demand at the end of first half 1998, he said.
Dauvin said there was even a chance of undercapacity in 1999/2000. The long-term market growth rate remained unchanged at 15 percent, he said.
While many Asian companies had been ramping up production capacity at above average rates, these companies could now come back into line with the rest of the industry, Dauvin said.
Of the 1998 market growth, Dauvin saw eight percent growth in the Asia-Pacific region, 10 percent in the Americas, 13 percent in Europe and six percent in Japan.
This would give the United States a world market share of 34 percent, followed by Japan at 23 percent, Europe at 22 percent and the rest of Asia at 21 percent.
In products, the strongest growth would be in differentiated Integrated Circuits at 14 percent, while memories would rise five percent. The market for DRAMs could even fall.
16:56 01-21-98
Copyright 1998 Reuters Limited. All rights reserved.
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By Yoo Choon-sik
SEOUL, Jan 21 (Reuters) - An international trade group representing semiconductor equipment and materials makers backs multinational efforts to help South Korea overcome its economic crisis, its vice president said on Wednesday.
"We very much support the efforts of governments of the United States, Japan, Korea and international institutions, whether it's World Bank or IMF, to develop programmes and policies that help stabilise currencies and get us past this crisis," Paul Davis (corrects), vice president of the Semiconductor Equipment and Materials International (SEMI), told Reuters.
He was responding to a question whether he agreed to Micron Technology Inc's <MU.N> position that bailout of South Korean economy could harm competition in the semiconductor industry.
"Our position is that Korea's semiconductor industry is inevitable part of the world semiconductor market and certainly part of the global economy," Davis said. "So our policy is we support interventions that help get us beyond the crisis."
Micron's CEO Steve Appleton said in November South Korea's overaggressive expansion of computer chip production was partly to blame for its economic woes and said he feared a bailout would allow Asian makers to dump products on the world market.
In early December South Korea reluctantly turned to the International Monetary Fund for a bail-out amounting to $58.35 billion to overcome a financial crisis.
Davis also said that moves by South Korean chipmakers to cut back capital investment would have little major impact on the global industry and that the moves should be taken into account in terms of the cyclical characteristics of the industry.
"If you look at the history of investment, just two years ago growth was where, 45 percent, 65 percent? You can't sustain that yearly, yearly, yearly," he said.
06:44 01-21-98
According to the Korea Semiconductor Industry Association, capital investment by the country's semiconductor makers is expected to fall to around $2 billion this year from an estimated $3.15 billion last year.
"Between busy years there have to be some slow years," Davis said. "Certainly we hope that a turnaround happens quickly, that currency stabilises and that companies become able to access capital markets."
South Korea's largest conglomerate, the Hyundai Group
1/8HYGR.CN], said on Tuesday it was shelving its plan to build a $5 billion semiconductor plant in Scotland as part of a restructuring drive.
The International Monetary Fund has recommended Asia's largest tiger economy cool down its economy by slashing economic growth target, cutting fiscal spending and tightening monetary controls, to cap inflation.
Headquartered in Mountain View, CA, SEMI has more than 2,000 member companies in North America, Asia and Europe. Their products and services contribute more than $65 billion to the world economy, according to a SEMI statement.
The statement was released in Seoul to mark the opening of the annual SEMICON Korea exhibition of semiconductor manufacturing equipment and materials.
06:51 01-21-98
Copyright 1998 Reuters Limited. All rights reserved.
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