Semiconductor Equipment Manufacturers Appear Poised for Recovery; New consumer and industrial technologies driving growth
PEBBLE BEACH, Calif.--(BUSINESS WIRE)--Jan. 12, 1999--After a three-year sales drought, including a steep downturn in 1998, the semiconductor industry appears poised for recovery in mid to late 1999.
That's the consensus of the speakers who appeared on the first day of the 22nd annual SEMI-Industry Strategy Symposium (ISS) now under way here on the Monterey Peninsula.
One of the key questions to be answered, they said, is whether the coming 12 months will be an average or boom year.
The optimism is based on 4th quarter 1998 sales of semiconductors. Those sales took an 8 percent sales jump from the 3rd quarter, to the surprise of many industry veterans.
SEMI-ISS is sponsored by the Semiconductor Equipment and Materials International (SEMI), the global trade association representing the semiconductor equipment industry's capital equipment and flat-panel display makers.
Close to 300 participants are attending SEMI-ISS at the Inn at Spanish Bay resort.
SEMI-ISS' first day speakers included Jean-Philippe Dauvin, group vice president and chief economist for the French-based ST Microelectronics, and Hein van der Zeeuw, senior vice president, telecom terminals, for Dutch-based Phillips Semiconductors.
Dauvin was especially optimistic in his outlook.
He projected a worldwide growth rate of 7 percent for 1999, saying the rate could jump as high as 15 to 20 percent. Most of that growth will take place in the second half of the year, he said.
Indeed, Dauvin said the market is returning to its historic growth rate of 18.6 percent, a rate that has prevailed for the past two decades.
Based on that rate, sales of semiconductors should jump to $290 billion by 2003 compared to $132 billion in 1999.
That growth should help drive and open new markets for capital equipment makers as semiconductor companies rush to meet demand.
In addition, Dauvin said relatively untapped markets in the digital consumer products and automobiles-not only PCs-will propel his positive outlook into the first years of the next millennium.
These two markets alone will represent close to 50 percent of semiconductor sales by 2003. This will challenge equipment companies to lead the way in terms of helping to find new designs and applications.
Dauvin said the excess capacity that has plagued the industry for the past few years is disappearing, and could be erased altogether by mid-1999.
"Clearly, supply and demand is coming into balance," said Dauvin. "The market is returning to growth."
Van der Zeeuw, too, was decidedly optimistic about the explosion of worldwide cell phone use among consumers. He projected that there will be 600 million-plus wireless phones in use by 2002 compared to the 250 million today.
He said 180 million wireless phones will be manufactured in 1999 alone, and added that more cell phones are now manufactured than either TVs or PCs.
"This is a big, big market," said van der Zeeuw. "And it's going to get a lot bigger."
Another speaker, Mario Morales, program director for semiconductor research at IDC in Mountain View, Calif., reflected the optimism expressed by the two Europeans at SEMI-ISS.
Morales forecasted a consolidation of PC makers, which could impact future sales of semiconductors. He noted that the big players in the market, such as Compaq, Dell and Hewlett Packard are capturing an increasingly larger share of PC sales from smaller manufacturers.
However, he said PC sales will remain one of the major drivers for growth in the semiconductor equipment manufacturing industry for some time to come.
SEMI-ISS Keynote speaker Jim Bartlett, vice president, consumer solutions and strategy at IBM Corp., discussed his view of "pervasive computing" and "pervasive computing devices." He said these devices will become more and more popular with consumers, especially those who are increasingly melding their work and home life.
Bartlett said that consumers would rather use a number of convenient devices, such as wireless phones, pagers and personal digital assistants (PDAs), than have all of those function combined into one single-used device.
"A single-use device is easier to use," said Bartlett, and noted the explosion of cell phones among today's consumers.
That will change the paradigm of the technology industry, which relies on hardware sales.
Ten years from now, he added, profits will be made by providing content and services rather than making and selling hardware.
That change will signal a significant shift for not only capital equipment and semiconductor makers, but the PC manufacturers as well.
Bartlett said the industry will have to advance existing technology, such as developing low-powered silicon chips that can run for hours on regular batteries.
Morales also noted this future shift.
"Many of the PC companies will be able to expand into other markets," said Morales. In fact, he said, "They'll get into these markets."
The attendees represent some of the big names in technology, such as IBM Corp., Intel Corp., Motorola and Texas Instruments.
The event is viewed as one of the most important forecasting events for the industry, and gives participants and presenters a chance to compare notes on their outlook for the new year.
Based in Mountain View, Calif., SEMI serves more than 2,300 companies participating in the $65 billion semiconductor and flat panel display equipment and materials market.
SEMI maintains offices in Austin, Beijing, Boston, Brussels, Hsinchu, Moscow, Seoul, Singapore, Tokyo and Washington, D.C. Visit SEMI online at www.semi.org.
SEMI-ISS concludes Wednesday, Jan. 13.
CONTACT:
SEMI
Bruce Lewis, 510/219-7998
|
