Thursday October 28 2:04 AM ET
World Chip Market Forecast To Grow 15 Pct In 1999
By Therese Poletti
SAN FRANCISCO, Oct. 27 (Reuters) - The worldwide semiconductor industry is
expected to grow 15 percent this year, fueled by a proliferation of chips for
communications and Internet infrastructure, an industry trade group said.
The Semiconductor Industry Association said Wednesday in its annual forecast that
sales of the worldwide chip market will top $144 billion in 1999, as the industry enters
its first sustained recovery since 1995.
This forecast is higher than the previous SIA forecast. Last year, the SIA said it
expected the worldwide market for computer chips to grow 9.1 percent to $133.4
billion, but as the sales improved, it upped its estimate to 12 percent.
In 2000, the SIA forecasts that sales will jump 21 percent to $174 billion, with
continued growth of 20 percent in 2001 to $209 billion and reaching a record high of
$234 billion in 2002, with a gain of 12 percent.
The SIA said this forecast represents the cyclical nature of the semiconductor business,
which emerged last year from the longest-running downturn in the industry's history.
''This is the 'great year of recovery' for the semiconductor industry,'' said Brian Halla,
chairman, president and chief executive of National Semiconductor Corp
(NYSE:NSM - news)., in a statement. ''Demand for semiconductors will surge due to
proliferation of wired and wireless information appliances as well as Internet
infrastructure products.''
The SIA also forecast that DRAM (dynamic random access memory) chips will grow
over 30 percent over the next three years, the first time that the memory chip market
has seen positive sales growth since 1995.
DRAMs are expected to increase 31 percent to $18 billion in 1999, 39 percent in
2000 to $25 billion and 44 percent in 2001 to $37 billion. Sales will grow 5 percent in
2002 to $38 billion, due to the cyclical nature of the DRAM business.
The SIA forecast should be good news for the once-embattled world's memory chip
makers, such as South Korea's Hyundai Electronics Industries Co. Samsung
Electronics Co. Ltd., and Micron Technology Inc (NYSE:MU - news). of Nampa,
Idaho. During the recent industry slowdown, too much manufacturing capacity lead to
sharp price cuts on memory chips, and a cutback on building new manufacturing
plants.
''It's clearly good news for us and for our industry,'' said Jim Morgan, the chairman
and chief executive of Applied Materials Inc (Nasdaq:AMAT - news)., the largest
maker of semiconductor equipment. ''It clearly means they expect the demand for
chips to be up for the next couple of years.''
Morgan added that he believes the current industry recovery is a much broader one
than past recoveries, because it is spread out over many different product lines, with
chips in widespread use including in many consumer products.
Flash memory is likely to become the fastest-growing memory product, with
expectations for flash memory sales to jump 63 percent this year, fueled by the use of
flash in digital cameras and cellular phones.
''This is the first time that DRAMs have not lead a memory recovery,'' said Doug
Andrey, a spokesman for the SIA. Flash should jump 63 percent to $4.1 billion in
1999, 36 percent in 2000 to $5.5 billion, 19 percent in 2001 to $6.6 billion and then
slow down to one percent growth to $6.7 billion in 2002.
Companies in the flash business include Sunnyvale, Calif.-based Advanced Micro
Devices Inc (NYSE:AMD - news).,, Intel Corp (Nasdaq:INTC - news). of Santa
Clara, Calif. and others.
Growth in the microprocessor market, which is dominated by chip giant Intel, will slow
by historical standards, due to a maturing PC market, the SIA said.
Microprocessors will grow 11 percent to $28 billion in 1999, 17 percent to $32 billion
in 2000, 14 percent to $40 billion in 2001 and 13 percent in 2002 to $42 billion. Last
year, however, microprocessors were only up 5.6 percent.
Microcontrollers, a product area which includes digital signal processors and
microcontroller chips, are growing faster than microprocessors for the first time.
Microcontrollers are used in products such as set-top boxes.
DSPs, which are used in many telecommunications products and made by companies
like Dallas-based Texas Instruments Inc (NYSE:TXN - news)., are currently the
industry's fastest growing product line segment. DSPs will grow at least 30 percent
from 2000 to 2002, the SIA said.
The microcontroller market will grow 16 percent in 1999 to $14 billion, 27 percent to
$18 billion in 2000, 25 percent to $22 billion in 2001 and 18 percent to $26 billion in
2002. |
