Communications Boom Drives
Chip Growth
(06/08/00, 1:15 p.m. ET) By J. Robert Lineback, Semiconductor
Business News
For the first time in four years, the semiconductor
industry is firing on all product cylinders.
Growth rates for all major categories in 2000 range
between 16 percent (for microprocessors) and 116
percent (for flash memory), according to the new
midyear forecast released by the Semiconductor
Industry Association, San Jose, Calif.
On Wednesday, the SIA boosted its forecast for
worldwide semiconductor revenue, to $195 billion in
2000 from itsoriginal prediction of $174 billion at the
start of this year. The midyear forecast, released during
a luncheon in nearby Redwood City, hikes the overall
growth rate, to 31 percent in 2000 from the SIA's 21
percent projection issued last October. Moreover, the
U.S. trade group said it expects the chip industry to
reach $312 billion in sales in 2003, with most product
categories showing steady or strong growth during the
next three years.
In addition to the traditional major product categories,
optoelectronics has emerged as a star player in the
current upcycle, said John Dickson, executive vice
president and CEO of Lucent Technologies'
Microelectronics and Communications Technologies
unit. During his presentation of the midyear forecast at
the SIA luncheon, Dickson referred to optoelectronics
devices as the new "belle of the ball," suddenly moving
from "a very ho-hum industry or market in the past
decade" to spectacular growth.
"Going forward, we see absolute explosive growth,"
Dickson told the gathering of industry executives,
analysts, and press. "From Lucent's point of view, we
would say this [SIA midyear forecast] understates what
is happening in optoelectronics."
The new SIA forecast shows sales of optoelectronics
devices jumping 32 percent, to $7.6 billion worldwide
in 2000, followed by 29 percent growth, to $9.9 billion
in 2001, and 26 percent growth, to $12 billion in 2002.
By 2003, the opto chip market will be $15 billion, with
an increase of 23 percent in that year, according to the
SIA midyear forecast.
The growth in optoelectronics is being fueled by
growing demand for high-speed backbone
communications equipment for Internet access, video,
and data transmissions.
"As part of my own business [at Lucent], we have [an
optoelectronics] business that will probably grow in
triple digits this year," Dickson said.
He said the company's revenue in optoelectronics is
running at an annual rate of about $600 million.
"We are severely capacity limited, and I think this is
going to become a significant opportunity for the
industry," Dickson said.
But communications is also driving strong growth in the
existing major semiconductor categories as well,
causing the SIA and many market research firms to
increase forecasts for growth in the next couple of
years.
"This is the first time in 15 years that an upcycle has
been led by something other than the computing
industry and the first time since 1996 that our industry is
back on the long-term growth rates," Dickson said at
the SIA luncheon. "It would appear there is no end in
sight to the communications explosion. At least from the
service provider level, it could well be for the next five
to 10 years they are supply limited in terms of how they
run out their networks and build them."
If so, that's great news for the semiconductor industry,
which suffered one of its worst downturns ever in the
late 1990s and has had trouble overcoming excess
production capacity in the past couple of years. But
chip-making plants are nearly tapped out, according to
the latest industry statistics, which show 8-inch wafers
fabs running at 99 percent of their installed capacity.
And shortages of more ICs are expected in the second
half of 2000, driving up average selling prices.
The communications drive is causing nearly all chip
segments to rise with the tide. Microprocessor revenue
-- heavily influenced by PC shipments -- will return to
double-digit growth in 2000, partly because of new
applications in communications, driven by the Internet,
said the SIA forecast. MPU sales are now expected to
grow 16 percent, to $32 billion in 2000 from about $28
billion in 1999, the new forecast said. By 2003,
processor sales are expected to reach $42 billion.
One of the fastest growing product segments is DSPs,
which will increase 55 percent, to $6.8 billion in 2000,
and reach $14 billion by 2003, according to the SIA.
The hottest growth market is flash memory, which will
increase 116 percent, to $9.9 billion in 2000, after
jumping 83 percent in 1999, to $4.3 billion in sales,
Dickson said. Even DRAMs are getting a lift in the
upcycle after a severe drop in revenue that pushed sales
to $14 billion in 1998 from the high point of $41 billion
in 1995. DRAM revenue is expected to grow 42
percent, to $29 billion, in 2000 and 44 percent, to $42
billion in 2001, according to the SIA forecast. |
