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To: JEFF K who wrote (37740)	12/10/1998 2:07:00 PM
From: BillyG	Read Replies (1) \| Respond to of 50808

Finally, chip sales top last year's totals, says analyst semibiznews.com A service of Semiconductor Business News, CMP Media Inc. Story posted 12:30 p.m. EST/8:30 a.m., 12/10/98 By J. Robert Lineback SCOTTSDALE, Ariz. -- Fourth-quarter revenues for integrated circuits will be slightly above totals recorded in the same period last year, marking the first time in more than two years that IC sales have been stronger than the previous year, said analyst Bill McClean, president of IC Insights Inc. Worldwide IC sales in fourth quarter are turning out to be stronger than expected, according to McClean, who is now estimating a 13% increase over revenues in the third quarter of this year. Moreover, the $30.13 billion in IC sales in the current quarter will be about 0.6% higher than fourth-quarter revenues in 1997, which totaled $29.95 billion, according to IC Insights, based in Scottsdale. "This will be the first time in two-and-a-half years that revenues will increased in a quarter over a year ago," he said. "It's not much of an increase but it is indicative of the trend." Last August, IC Insights suggested that the trough of the 1998 recession had occurred in the summer and that the industry appeared to be on the road to a recovery in 1999 (see Aug. 6 story). At the time, the market research firm was predicting a 10% increase in total semiconductor revenues in 1999 over 1998, but now IC Insights is nudging its forecast a little higher--to 11%--based on the strength of month-to-month increases since September. "The 13% sequential increase in the fourth quarter [compared to the third] is significant," said McClean, who said that level of growth has only been seen twice in the past seven years. The industry saw strong quarter-to-quarter sales growth in Q2 of 1993 when revenues jumps 14% over Q1, and in 1995 when Q2 was 15% higher than the first three months of that year, according to McClean. While the industry is seeing strong quarterly growth, a seasonal drop is expected in the first quarter of 1999, he said. The first quarter sales are expected to dip by 2% from the current levels, but that would still make sales in Q1 of 1999 about 10% higher in than they were in the same period this year. For 1999, IC Insights said today that it has raised its 1999 forecast to $140 billion compared to $126 billion in 1998. This year, chip sales are expected to be 8% lower than they were in 1997, McClean said. Revenues are expected to grow partly because average selling prices of semiconductors will stop falling as sharply as they have in the past couple of years. That will be a result of significant cuts in capital spending for new fab capacity, which will continue through next year, he said. This will then set up the potential for chip shortages and a much higher revenue growth rates in 2000. McClean is now predicting a 24% increase in chip sales in 2000.