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Technology Stocks : FSII - The Worst is Over? -- Ignore unavailable to you. Want to Upgrade?

To: Joe Dancy who wrote (1826)	3/18/1998 1:10:00 AM
From: Kent Sarikaya	Read Replies (1) \| Respond to of 2754

Joe, nothing is going to happen anytime soon unfortunately: Chip Revenue Will Slow, Report Says (03/17/98; 4:47 p.m. EST) By Patrick Waurzyniak, Electronic Buyers' News Lingering overcapacity problems, price volatility in memory devices, and the continued sluggishness of Asian economies will combine to dampen worldwide semiconductor revenue growth this year, with the memory market shrinking 9.7 percent in 1998, according to new research released Tuesday by market researcher International Data Corp. Mirroring an earlier report of softness in the chip business issued by the Semiconductor Industry Association, the prolonged Asian economic slump is forecast by the Framingham, Mass.-based researcher to wreak havoc with the semiconductor industry's sales throughout this year. The SIA's latest numbers, which the Mountain View, Calif.-based trade association released just last Wednesday, showed the worldwide chip industry's revenue down by 4.5 percent in January from December 1997 levels, while the SIA's latest quarterly three-month average for November to January showed semiconductor sales down by 8.5 percent. The sagging Asian economies and continued price volatility in the memory segment have dampened, but not fully extinguished, worldwide semiconductor revenue growth, according to IDC, which pegged anticipated worldwide chip growth to reach 8.4 percent growth and $148.7 billion in sales this year. IDC's 8.4 percent growth rate forecast for 1998 is a reduction from a mid-1997 estimate of 15.1 percent, but the market researcher said as memory revenue begins to rebound in 1999, the market will return to double-digit growth rates, eventually reaching $272.4 billion by 2002. According to IDC's new research report, the overall worldwide memory market will shrink 9.7 percent this year to $26.5 billion. Among IDC's findings are that a lingering overcapacity situation will hit dynamic RAM vendors especially hard, with DRAM revenue expected to drop 13.9 percent to $17.2 billion this year, after last year's 21.2 percent decline. IDC said it is expecting major capacity cutbacks to stabilize memory pricing by the fourth quarter of 1998, and the market researcher said it believes stable prices in combination with strong bit growth will drive memory revenue up in 1999 and beyond. "Although the Americas regions will be the strongest region for growth this year, the economic crisis in Asia has sent waves of uncertainty across every region and has caused us to decrease our forecast for 1998," said Mario Morales, IDC's research director of semiconductors. "Japan is of most concern because of current economic and political instability." IDC is anticipating that Japan's 4.8 percent revenue growth estimate for 1998 to be the weakest of any region. A lone bright spot in the chip business is the microprocessor segment of the industry, which IDC said it expects to expand 24.9 percent to $29.3 billion in 1998. "Despite a trend toward lower-priced processors to feed the demand for sub-$1,500 PCs, healthy unit growth for both the computing and embedded segments of the market will fuel the processor market," said Kelly Henry, senior research analyst of semiconductors. The IDC report says the U.S. semiconductor market will reach revenue of $94.5 billion in 2002, but European consumption share will remain flat throughout the forecast period. It also found the Asia-Pacific region will surpass Japan in revenue size by 1999. The report, Semiconductor Market Forecast and Review, 1997-2002, breaks out the worldwide semiconductor market by seven major product segments: metal oxide semiconductor (MOS) memory, MOS microcomponents, MOS Logic, Analog, Discrete, Optoelectronics, and Bipolar digital. The report gives five-year forecasts across four geographic regions, including Americas, Europe, Japan, and Asia-Pacific.