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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (39074)	11/2/2000 9:57:41 AM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

Executives say SIA is right in forecasting no downturn in next three years By J. Robert Lineback Semiconductor Business News (11/02/00, 09:41:11 AM EDT) SAN JOSE -- Top semiconductor executives here at press conference on Wednesday evening said they were completely comfortable and satisfied with a new industry consensus forecast that shows no real downturn in chip sales during the next three years and only a modest slowdown in revenue growth in the 2002 timeframe. "I think the industry is going to have a wind at its back for the next several years," assessed Jerry Sanders, chairman and CEO of Advanced Micro Devices Inc. During the press conference to release the annual forecast from the Semiconductor Industry Association, Sanders also blasted the "jerks" and "idiots" who he says have confused slowing growth rates with the peaking of revenues. The AMD chief executive chided the press, Wall Street investors, and a number of industry observers for confusing growth rates with chip revenue totals, and he said the real problem has been managing expectations in the current boom cycle. "I think the semiconductor industry is about a year-and-a-half into what should be a four-year cycle," added Sanders, refuting some warnings that growth and revenues will hit a slump in 2001 or 2002 due to an over buildup of production capacity. The SIA's new U.S. industry consensus forecast sets expectations for worldwide semiconductor growth at 37% in 2000, 22% in 2001, 10% in 2002, and 16% in 2003. Released on Wednesday, the SIA forecast shows chip sales growing from $205 billion this year to $319 billion in 2003 (see Nov. 1 story). The new SIA forecast shows flash memories being the fastest growing segment in 2000, jumping 130% to $10 billion, and continuing its climb in 2001 with a 44% increase to $15 billion. (See table below for breakout of segments.) AMD's Sanders jumped on other industry forecasts that show flash fizzling out. "As recently as May, the [SIA] forecast for flash memories--four years out--was $14.5 billion," Sanders said, referring to the 1999 mid-year update released in June. "We have seen the flash demand explode....But right now classic wisdom, or what I call conventional wisdom, is that flash is trash," he complained. "So any one in the flash business is getting their stocks hammered. AMD claims to be the world's largest flash memory supplier with 31% share, followed by Intel with 26%. "We think the flash market is going to be limited by supply," Sanders told the press conference. "The question is at what rate are we going to grow. I figure anyone in the flash business is going to be in pretty good shape for the next several years." Other Silicon Valley executives also said they are also confident that the chip industry will not suffer a repeat of a recession similar to the three-year slump in the late 1990s. The buildup of new communications infrastructures for broadband Internet access, data and voice convergence and wireless systems were all cited as being a key factor in filling in potential potholes in the next several years. "What is really changing the amplitude of cyclicality is the fact communications is the driver today, which will tend to mute any slowdowns," said Wilf Corrigan, president and chief executive officer of LSI Logic Corp. "There will still be cycles. But it is just that the amplitude of the cycles will be muted somewhat," he added during the SIA forecast press conference. "We expect that [muted slowdown] to happen somewhere around 2002--it might be a little later than that but until 2002, I don't think we see that [overall growth rates] substantial slowing," said the LSI Logic chief executive. Pricing of products is another factor that will determine how quickly the industry grows in the 2002-2003 timeframe, noted executives during the press conference. DRAM prices recently have been driven lower in recent weeks, eroding revenue growth in that segment. The problem there has been expectations for stronger PC sales in the final months of 2000, and system makers are adjusting their inventories, said Steve Appleton, chairman, CEO and president of Micron Technology Inc. Appleton said the industry has not seen the level of capacity build up that was underway in 1995 and 1996, which created a major glut of DRAMs and other products in the late 1990s. "What we are experiencing today is some moderating of some growth rates in various sectors, but in general the supply base has just not seen the kind of growth that has typically created the kind of downturns that we have witnessed in the past," said Appleton. SIA chip forecast by regions Product segments 2000 2001 2002 2003 Analog $31 billion (+39%) $37 billion (+20%) $40 billion (+10%) $47 billion (+15%) DRAM $31 billion (+48%) $41 billion (+34%) $43 billion (+5%) $52 billion (+21%) Flash $10 billion (+130%) $15 billion (+44%) $18 billion (+21%) $23 billion (+24%) Logic ICs $34 billion (+48%) $43 billion (+26%) $49 billion (+13%) $56 billion (+13%) Microprocessors $30 billion (+11%) $32 billion (+6%) $35 billion (+11%) $39 billion (+10%) Microcontrollers $19 billion (+35%) $24 billion (+25%) $27 billion (+13%) $34 billion (+29%) Discretes $18 billion (+31%) $20 billion (+13%) $21 billion (+4%) $22 billion (+7%) Optoelectronics $10 billion (+68%) $13 billion (+30%) $15 billion (+19%) $19 billion (+28%) SIA forecast