Nat and AMAT investors, I believe this story was already posted, but I also believe there are new quotes here....
Global Chip Sales Seen Recovering Modestly
SAN FRANCISCO (Reuters) - The semiconductor industry, reeling from its worst-ever slump this year, should rebound a bit in 2002 with worldwide revenue growth of 3 percent and finish out 2003 with strong growth of about 30 percent, according to market researcher Gartner Dataquest.
Gartner Dataquest projects 2002 to be a recovery year, marking worldwide semiconductor revenue growth of 3 percent to $152 billion. The Sept. 11 attacks compounded an already weak environment, and Gartner Dataquest now forecasts 2001 global sales of chips to decline 35 percent to $147 billion.
``The slowdown in capital expenditure in 2001 will likely spill over into 2002, resulting in supply-side tightness in 2003, when a stronger demand side is expected to have returned to the market,'' said Richard Gordon, principal analyst for Gartner Dataquest's worldwide semiconductor group.
``Improvements in the macroeconomic environment will likely fuel a PC replacement cycle and a recovery in the wired communications sector,'' he said. ``In addition, the roll-out of 2.5 generation and 3G cellular will be well under way in the 2003 time frame, boosting demand for silicon-rich handsets.''
Next-generation mobile phones boasting intensive data services, such as Web surfing, e-mail, e-commerce and voice recognition will require faster processors and more flash memory and other types of chips, which will help the chip industry.
A SAD STATE
But for now, both the chip industry and the personal computer industry are in a sad state.
Intel Corp. (Nasdaq:INTC - news), which held an executive Webcast on Tuesday, expects PC sales to be flat to down this year -- which would be the first time that would have happened in the 20-year history of the industry.
Chip companies that manufacture semiconductors and sell them to the PC, communications, military, automotive and other industries have suffered this year, racking up hundreds of millions in losses and seeing sales that, in some cases, have plunged 60 percent or more from year-ago levels.
``The situation in the chip industry is quite rough, operating well below the break-even level,'' Hitachi Ltd. (6501.T) Executive Vice President Yoshiki Yagi told a news conference on Tuesday in Tokyo to announce half-year results for Japan's biggest electronics maker.
Two weeks ago, Hitachi raised the number of its expected job cuts to 15,900 out of 341,000 employees, due mostly to its ailing chip division.
The chip slump has been especially hard on the memory chip business, which includes dynamic random-access or DRAM chips, which are the most widely used in personal computers. Japan's top chipmaker Toshiba Corp. (6502.T) and Germany's Infineon Technologies AG (IFXGn.DE) were reported to be close to a deal to merge their struggling memory-chip businesses.
Even mighty Intel has not escaped unscathed. It, too, has laid off staff -- numbering 5,000 -- earlier this year, and has seen its third-quarter profits tumble 77 percent with sales off 25 percent from year-before levels.
But Intel, like other chip companies that can afford to, is continuing to invest aggressively in new technologies and chip-making processes that help to cut costs and boost performance of their products.
``Despite incurring losses in 2001, semiconductor vendors must, wherever possible, maintain capital and research and development spending levels to ensure competitiveness, and ultimately survival, as market conditions improve,'' Gordon said.
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