Hey, Ian, remember this Dauvin dude? <G> :
European Executive Expects 5%-8% Recovery In Chip Market
PARIS -(Dow Jones)- The chief economist for Franco-Italian
semiconductor maker STMicroelectronics NV Tuesday forecast a recovery
for the chip market in 1999, but his numbers fell short of the bullish
projections made Monday by an American research firm.
STM's Jean-Philippe Dauvin expects the chip market for 1998 to fall
8.0% to 10% from its performance in 1997. For 1999, Dauvin estimated
market growth at 5.0% to 8.0%.
On Monday, U.S. research firm Dataquest Inc. estimated the world-wide
semiconductor market would grow by 11.8% in 1999, with revenue of $155
billion.
"I don't think 12% is out of the scope (of possibility), but I think
we should be more around 5.0% to 8.0% growth" for 1999, Dauvin said. He
added that Dataquest's estimate of a 6.0% market decline in 1998 was too
optimistic, since it implies a strong rebound in fourth-quarter sales.
"I think the Dataquest outlook for the fourth quarter is a bit rich," he
said.
The chip sector has been plagued by oversupply caused by
lower-than-expected demand for personal computers and the Asian
financial crisis, among other factors. Industry watchers have been
trying to figure out when things might again begin to pick up.
As an industry, "we built too much capacity" starting in 1994 and
1995, said Dauvin, who also chairs the World Semiconductor Trade
Statistics group. "Then came the Asian issue, which is accelerating the
purging of the system, but it is a very bitter pill which could last
another one, two or three quarters."
However, Dauvin said he felt that "in the third quarter and in the
fourth quarter, we are near the bottom of the cycle" for the market. He
said reduced capital expenditure by semiconductor companies, the growth
of the sub-$1,000 category for personal computers, which has spread to
Europe, and the closures of some production facilities all augured well
for 1999.
In fact, Dauvin said he expects there to be significant capacity
shortage in a couple of years. Discussing reduced capital investment and
production decreases, he said, "I think there will an overreaction as
great as the reaction of the last two years," which led to too much
capacity.
Dauvin repeated his long-held assertion that there are good
fundamental reasons to expect growth in the semiconductor market because
of the ever-progressing technology advances and price declines.
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