The fallacy of these predictions is that by nature, killer apps come out of nowhere, and so are entirely unpredictable.
Without 'killer apps' chip growth bogs down in first half of decade, says Dataquest
By Mark LaPedus
Semiconductor Business News
(11/09/01 14:30 p.m. EST)
SAN FRANCISCO -- The lack of so-called "killer" or even "wounded" applications to jumpstart the PC, cellular phone, and other related chip-application sectors could spell more trouble for IC suppliers in 2002, warned analysts at a semiconductor conference here this week.
During the Gartner Dataquest Semiconductors 2001 conference, analysts gave chip makers little or nothing to cheer about because their latest forecasts show flat-to-negative "growth" in key end-user products during 2002.
"We can't see any [end-user product] segment rising to the top right now," lamented Jim Hines, who tracks the silicon foundry business at Dataquest Inc. in San Jose. "The level of excess inventories and lackluster demand [for systems- and chip-level products] is also a problem," said Hines in an interview at the conference.
The lack of key product drivers, weak economic conditions, and an oversupply of inventory will cause the worldwide chip market to fall by 34.6% to $147 billion in 2001, according to Dataquest. The market researcher is predicting 3% growth in 2002 to $152 billion (see Oct. 31 story).
But even a more telling sign is that the chip market is slowing in growth during the first half of this decade mostly because of the big setback in 2001. In total, chip sales will increase by only a 2.5% compound annual growth rate between 2000 and 2005, Dataquest said. The new forecast shows worldwide chip sales growing 30% in 2003 to $197.8 billion and increasing another 23.6% in 2004 to $244.5 billion. But semiconductor revenues will flatten out in 2005, with only a 5% increase to $256.7 billion, according to Dataquest.
Analysts said the chip industry does not have clear "killer apps" drivers for growth--not even "wounded" applications that were once promising to fuel the next wave of growth, according to one Dataquest forecaster.
For example, the PC market remains bleak--at least for the short term. "It's not a pretty sight," said George Shiffler, who tracks that segment for Dataquest.
The slowing growth of the PC industry has been exacerbated by fierce competition between suppliers, he said. Also compounding the problem has been uncertainty in PC markets after the Sept. 11 terrorist attacks in the United States and a lackluster response to Microsoft Corp.'s new Windows XP operating system, Shiffler said.
PC and chip makers were hoping that Microsoft's Windows XP software would pump new life into the struggling PC business, but the much-awaited operating system will have little or no impact on computer sales in the short term, Shiffler said. "We have doubts that Windows XP will create a buzz in the market," he cautioned. "At best, Microsoft's XP will provide the industry with a modest boost," he added during a presentation here.
Not everyone agrees, however. New business budgets will help pump new life into PC shipments in mid-2002, said Avo Kanadjian, vice president of marketing for Rambus Inc. of Mountain View, Calif. "I expect the PC market will begin to grow in the second quarter of 2002," Kanadjian told SBN while attending the Dataquest conference.
Overall, Dataquest projects that the worldwide PC market will show an annual compound growth rate of 7.5% from 2000 to 2005. A total of 121.6 million systems are expected to be shipped in 2001, a 6.8% decline over 2000, said Dataquest.
But worldwide PC shipments are projected to reach 128.3 million units in 2002, a 5.5% increase from volumes in 2001, said Dataquest. But in 2003, PC shipments are expected to surge again growing at nearly 21% to 155.1 million units, followed by 12% growth to 173.9 million units in 2004 and another 8% increase to 187.6 million units in 2005.
Another key driver for chip makers is cellular phones. But this market is projected to remain flat from 2000 to 2002, said analyst Stan Bruederle, who tracks the segment for Dataquest.
Worldwide shipments of cell phones are projected to hit 400 million units in 2001. "We looking for about 406 million units in 2002," Bruederle said.
In the overall communications chip market--which includes wireless and wireline systems--the prospects look somewhat improved for IC suppliers. "We beginning to see the bottom," said Xavier Pucel, market research analyst for Altera Corp. in San Jose.
But in 2001, the market has been a complete disaster. "We fell off the cliff," said Jeremey Dovovan, who watches the market for Dataquest. "Everybody overbuilt and now we have overcapacity," he said.
The worldwide communications chip market is projected to fall 38% this year, from $65 billion in 2000 to $40.3 billion in 2001, he said. Of those figures, 60% is geared for wireless chips, while 40% is wireline applications, according to Dataquest.
In 2002, the communications chip market is projected to be flat. The market will hit $40.4 billion in 2002, Dovovan said. |
