** Semi Equips**
I have been following Dauvin (see article) for quite a few years and hs is quite accurate in his analysis. Here is an article from February which I though interesting. More on this later....
ST Microelectronics Economist Sees Strong Signs of Chip Turnaround
By Matthew Sheerin
Electronic Buyers' News
Story posted 6 p.m./3 p.m., PST, 2/2/99
SAN FRANCISCO -- Citing surprisingly strong global chip sales in the fourth quarter
of 1998, a leading industry economist believes semiconductor demand could come in
line--and possibly outstrip supply--sooner than expected.
"It was the strongest quarter in the history of semiconductors," said Jean-Philippe
Dauvin, corporate economist for STMicroelectronics NV. During an interview today at
the NationsBanc Montgomery Securities financial conference here, Dauvin said he may
soon revise his previous forecast for global chip sales in 1999, which currently is at 7%.
"If I do revise it, it won't be to 7.5, but probably much higher," he added.
Pointing to strong expected demand in the PC sector and in the embedded-controller
market due to Y2K concerns, Dauvin said the supply-demand imbalance that has
plagued component suppliers in the last three years could end in the second half of the
year.
Dauvin is reluctant to revise the forecast just yet, however. "January and February will
tell whether this is a clear [upward] trend" or just seasonal, Dauvin said. Nevertheless,
Dauvin believes the semiconductor bust of 1998 will give way to a new boom, as new
markets develop and chip revenues return to possibly double-digit growth rates (see
story in the Jan. 15 publication of SBN).
The the Paris-based economist is also concerned about continued problems in Japan,
where semiconductor sales fell 20% last year and 40% over the last four years, he said.
"Japan represents a quarter of the [global] business."
Dauvin predicted that DRAM prices, which have stabilized in recent months, "could
take another dip" in the coming months due to competition in that market, despite
production cutbacks. Semiconductor ASPs overall, he said, are slipping at appropriate
rates.
ST itself hopes to make use of two new fabs -- which are currently idle -- by year's
end, said Francois Guibert, group vice president of business planning and development
for the European company. The facilities, in Italy and France, will be equipped to
produce chips at line widths of 0.25- and 0.18-micron. "We will equip it quickly as
soon as the market rebounds--hopefully by the end of '99," he said.
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