Optimistic report takes contrary view of semiconductor market
By Margaret Quan
NEW YORK - A contrarian analysis of the semiconductor industry, due to be posted online tomorrow, predicts respectable to strong annual growth over the next three years for the semiconductor industry, which is now struggling through a downturn.
The forecast by IC Insights Inc. and Fisher-Holstein Inc. expects 10 percent, 24 percent and 30 percent annual growth for the next three years.
The report, "The Semiconductor Market Upturn: Surprise, Surprise, Surprise!" points to several market segments for evidence of a coming upturn, including the DRAM market, which shows signs of stabilizing after two years of rapid and steady price erosion. The report foresees overall semiconductor unit volume and average selling prices recovering later this year.
The report makes several assumptions about the global economy and the electronics market: the Japanese economy will stabilize in 1999 and recover in the year 2000; other Asian economies will recover in the year 2000; European and U.S. markets will continue to show growth; and currency exchange rates will remain at 1998 levels. It also presumes no negative impact stemming from year 2000 difficulties.
Authors Bill McClean, president of research firm IC Insights, and John Kanz, president of consultancy Fisher-Holstein, suggest that the industry upturn will soak up the market's present excess production capacity. Demand will grow to outstrip supply, and capacity shortages will again appear by 2001, sparking another rush to build, they said.
The underpinnings of the upturn, according to McClean, is demand for electronics equipment, which is projected to grow 3 percent in 1998 and 9 percent in 1999. The factors are thus in place for the industry to return to its historical growth pattern, McClean said, as long as no unforeseen event occurs, such as a drastic decline in the yen's value.
Manufacturers who stay the course during the present downturn will be in the best position to take advantage of the upturn, the report suggests.
"Companies like Intel and IBM will stand out for having continued to invest during the downturn and will reap the benefits of existing capacity on line to meet customer demands, when some competitors will be unable to do so," the report concludes. |
