SIA: Chip market to grow 10.9% in 1999
By James Carbone -- Purchasing, 12/10/1998
The worldwide semiconductor market will grow 9.1% to $133.4 billion, led by an increase in demand for microprocessors, digital signal processors, and memory chips, according to the Semiconductor Industry Association. However, in 1998 chip sales will fall 10.9% to $122 billion."The semiconductor market is a $122-billion industry this year, but it should hit $182 billion by the year 2001. That's a growth rate of 42% in the next three years," says Steven R. Appleton, chairman, chief executive officer, and president of Micron Technology. He presented the forecasts at a recent gathering of SIA members.
"The underlying fundamentals of the semiconductor business are strong. There is no question this industry will continue to drive the world economy in technology advancements and value added to raw materials," Appleton says.
The SIA forecast envisions a healthy chip market in 1999 that will overcome the oversupply problems and the Asian economic crisis.
The SIA says the memory market, which has seen plummeting prices since early 1996, should reach the bottom of the down cycle this year as sales decrease 25.7% from 1997 levels to $21.8 billion.
dram, the largest segment of the memory market, will end 1998 as a $12.9-billion market--a 34.8% decline from 1997 sales. The SIA forecast calls for a strong sales recovery in 1999 as dram revenues grow 25% to $16 billion. In 2000 and 2001, the dram market should grow 28% and 35%, respectively, with sales approaching $28 billion in 2001.
"During each of the last three years, we have continued to ship more and more bits of memory, but the rapid price declines have been unprecedented," Appleton notes. "'This was not caused by a slowdown in demand. In fact, demand continues to increase at robust levels year after year. We've simply had too much capacity in the marketplace."
Microprocessor sales will end at $23.6 billion, a 0.6% increase. Next year, sales are expected to increase 8.4%, followed by gains of 15.9% in 2000 and 17.6% in 2001. The SIA says that the decline was due to a slower growth rate for PCs and the push to the sub-$1,000 PC which has exerted price pressure on microprocessors.
Digital signal processor sales will grow 6.5% to $3.4 billion. The market is forecast to grow another 20.4% in 1999, 26.7% in 2000, and 30.1% in 2001. Sales in 2001 are expected to surpass $6.8 billion.
The analog market declined 4.6% in 1998 as sales hit $18.9 billion. Over the next three years, however, sales are projected to grow by 41%, consistent with the overall increase in the global chip market. The main end-use driver of analog demand is the global move to upgrade telecommunications networks to take advantage of the growth of the Internet and digital telecom technologies.
With demand driven by the power-management industry, the discrete market is expected to witness a 10.9% decline in sales this year to $11.7 billion. The market should experience modest growth over the next three years, with sales increasing 2.6%, 4.8%, and 6.4%, respectively. Total discrete sales should hit $12.0 billion in 1999 and $13.4 billion in 2001.
Logic chips, including asics and systems-on-a-chip solutions, will drop 14.9% to $17.9 billion this year, but should increase 6.0% in 1999, 10.8% in 2000, and 14.2% in 2001. The forecast for total sales in 2001 is $24.0 billion.
The optoelectronics market increased 2.1% in 1998 fueled by demand for digital consumer electronics such as digital cameras and digital video devices. Between 1999 and 2001, sales should climb 4.5%, 12%, and 12.7%, respectively.
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