Wednesday June 3, 10:51 pm Eastern Time
Semiconductor group sees global sales off 1.8 percent
(adds Daley statement)
By Kourosh Karimkhany
PALO ALTO, Calif, June 3 (Reuters) - Global sales of computer chips will decrease 1.8 percent to
$134.6 billion in 1998 largely because of Asia's serious economic troubles, the Semiconductor
Industry Association said on Wednesday.
In addition to Asia, the industry is facing falling prices for semiconductor products, a glut of
computer memory chips and slowing demand for personal computers. The pricing pressures are
hurting sales even in regions with strong economies.
In the Americas, for example, chip sales likely will fall about $3 billion from last year's $45.8 billion
total because of pricing pressures, the industry's main trade group said.
''The financial turbulence in Asia and other market changes has crimped the expected expansion of
global chip markets in early 1998,'' SIA President George Scalise said in a statement.
Recent news from major semiconductor companies backs up the forecasts. National Semiconductor
Corp. (NSM - news) plans to lay off 1,400 people. Intel Corp. (INTC - news), the world's biggest
chipmaker, expects flat revenue for the year and will eliminate 3,000 jobs through attrition, and
Applied Materials Inc. (AMAT - news), the biggest equipment supplier to the industry, is offering
voluntary severance packages to cut costs.
The SIA and other forecasters had expected chip sales to grow in 1998 after a lackluster 1997. But
the industry had a huge sales drop in the first quarter because of weak Asian currencies, slowing
purchases by personal computer makers and falling component prices.
First-quarter revenue declined 10.2 percent in the Americas, 4.9 percent in Europe, 11.5 percent in
Japan and 9.7 percent in Asia, according to the SIA.
Sales are improving in the second quarter, but not at a fast enough rate to offset the reduced orders
in the previous quarter, the SIA said.
In Washington, Commerce Secretary William Daly announced that the foreign share of the Japanese
semiconductor market grew a record 5.8 percentage points in 1997, allowing foreign chipmakers to
sell over $9 billion of semiconductors in Japan.
It was the largest year-to-year growth since implementation of the U.S.-Japan semiconductor
agreement, which aimed at expanding foreign access to Japan's markets.
The SIA also gave forecasts for specific industry segments:
-- Sales of computer memory chips, known as DRAMS, are expected to drop 26.6 percent in
1998 to $14.5 billion. A huge worldwide glut, now in its third year, is expected to dissipate late in
1998.
-- The increasing popularity of PCs that cost less than $1,000 will force microprocessor prices
lower. Microprocessor sales are expected to be about the same they were in 1996, about $23.4
billion with 42 percent of all sales coming from the Americas.
-- Digital Signal Processor, used in consumer electronics and telecommunication gear, will continue
to grow rapidly. Sales are expected to rise 23 percent in 1998 to $3.9 billion.
-- Geographically, Asia will be the weakest performer. Asia Pacific, which had been the hottest
emerging sales market, will grow just 2.8 percent to $31.0 billion this year, after growing 9.6 percent
in 1997.
-- Europe will show the best gains, with sales increasing 5 percent to $30.5 billion by year end. In
the Americas, sales will decrease 4.1 percent to $43.9 billion. In Japan, sales will fall 9.2 percent to
$29.1 billion.
Still, the SIA expects strong demand for access to the Internet to get semiconductor sales growing
again by the second half of the year and for the next few years.
Global sales will increase 17.2 percent in 1999 to $157.7 billion, 18.5 percent in 2000 to $187
billion, and 18.9 percent in 2001 to $222.3 billion, the SIA said.
|
