Worst year ever?
The long run of continuously faster and more powerful PCs has been ended
by the sub-$1,000 machine. This fundamental market shift not only is having
a profound effect on the industry leader, Intel Corp., but also is rippling
through the entire supply chain, wreaking havoc in many IC market
segments and in other sectors such as capital equipment.
"The high-end logic companies, such as Intel, have moved aggressively to
quarter-micron and below technologies so that they can offer
high-performance products with higher margins," said G. Dan Hutcheson,
president of VLSI Research Inc. in San Jose.
"But the big catch," the analyst said, "is that the PC customer doesn't really
care." Instead, he said, "the change is reflected in the customer's interest in
the $1,000 PC and an unwillingness to pay more for the 400- or 500-MHz
[superchips]."
The PC customer's new emphasis on lower cost rather than higher
performance can be seen in the plunging average selling price of the 32-bit
microprocessor. It has dropped by nearly one-third in just one year. The
ASP for the first five months of this year stood at $101.83, down from
$146.07 in the same period last year, according to new estimates by IC
Insights Inc., a Scottsdale, Ariz., market research firm.
The 30% drop in 32-bit MPU prices comes primarily from growing
pressures on Intel, which watched demand skyrocket for low-priced MPUs
as competition from x86 clone makers intensified during the past year,
according to analysts.
A year-ago the situation was far different. Then it was strong
microprocessor sales and prices that offset sharply eroding DRAM prices.
Today there is no product that can make up for the DRAM tailspin, which is
still going on.
"In 1997, microprocessor revenues were up 27% and we were originally
looking for an increase of 19% this year," said Bill McClean, president of IC
Insights. "But now it looks flat, at best, which will take about $5 billion out
of the market growth," the analyst said. "That's what has taken this market to
a negative outlook."
pubs.cmpnet.com |
