A service of Semiconductor Business News, CMP Media Inc.
Story posted 4:30 p.m. EDT/1:30 p.m. PDT, 11/11/98
SIA predicts 9.1% growth in 1999
as DRAM and MPU markets recover
By Will Wade
SAN JOSE--The global semiconductor market will see better times next year, as the Semiconductor Industry Association is predicting an overall growth rate of 9.1% in 1999. The trade group released its annual forecast here this afternoon, which said a recovery in the memory and microprocessor segments will spark an overall boost in silicon sales to reach $133.4 billion.
"The underlying fundamentals of the semiconductor business are strong," noted Steve Appleton, chairman and CEO of Micron Technology Inc., who will officially present the report at the SIA's annual awards dinner tonight. "We have some of the best and brightest people in the world working in our fabs. There is no question this industry will continue to drive the world economy."
The SIA's figures show the entire industry declining by 10.9% this year, the first time the overall chip market has shrunk since 1985. However, predicting a growth rate of 42% over the next three years, the chip industry's expansion will accelerate beyond next year to reach 15.2% in 2000 and another 18.2% in 2001. Total sales could reach $182 billion by 2001.
The main drivers for recovery next year will offset the biggest trouble spots this year. The memory market has been beset by falling prices, which will lead to a 25.7% decline in total 1998 sales. However, the SIA expects to see the overcapacity situation begin to ease and prices will reach the bottom of the down cycle, and these factors will drive DRAM revenues up.
The memory market is predicted to grow 18.1% to $25.8 billion next year. Sales will expand another 23% in 2000 and then swell 28% in 2001 to reach $40.5 billion.
The microprocessor segment has been flat this year at $23.6 billion, after two consecutive years of stellar growth. Sales will increase a modest 8.4% in 1999, followed by gains of 15.9% in 2000 and $17.6% in 2001 to reach $35 billion, according to the report. Although the MPU market has been slammed this year by slower growth in the PC market and falling prices for devices heading into the popular sub-$1,000 computer niche, the SIA expects to see the processor segment recover along with the overall semiconductor industry next year.
The digital signal processor market remains a bright spot in the industry, growing by 6.4% this year to $3.4 billion even as the rest of the industry saw one of the worst years ever. Although this was down from the two previous years that both saw growth in excess of 30%, 1999 will bring the segment back on track with 20.4% growth. The total DSP market could reach $6.8 billion in 2001.
The report sees declines in every major world region this year, but those drops will be offset by worldwide gains in 1999. The Americas market, which consumes one-third of the world's silicon, will shrink by 10.8% this year, but expand by 9.1% to $44.6 billion next year. The No. 2 market, Europe, has been stronger this year with only a 2.2% decline, and that will be erased in 1999 by gains of 10.3% to $31.3 billion.
The embattled Asia-Pacific market is already beginning to see some signs of recovery, but that won't be enough to offset a total drop in silicon sales of 8.1%. Next year will be better, SIA said, with an increase of 12.1% and the region is predicted to surpass Europe for the number-two spot in chip consumption by 2001, when sales could reach $43.9 billion.
Japan is currently in the throes of the Asian economic flu that has already passed through much of the region, and total chip revenue will plummet 21.4% this year, its second consecutive down year. However, with gains in the global chip economy predicted for 1999, Japan is expected to benefit with a 4.5% gain to reach $26.3 billion.
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