Eight of the top 10 semiconductor companies will reduce their capital equipment spending in 2002. That has members of PURCHASING Magazine's Editorial Advisory Board worried. At a recent board meeting, members said the lack of investment in new fabs and equipment will mean serious shortages of a variety of components next year ranging from semiconductors to passives. DRAMS could be especially hard hit in terms of supply and development of higher density parts.

Expect Intel to begin shipping its 2.53-gigahertz Pentium 4 processor by the end of the second quarter. The chip will be the fastest Pentium 4 processor. Buyers can expect the mobile Pentium 4 chip running at 2-gigahertz to ship by midyear.

The semiconductor industry is recovering from last year's downturn. Many chip companies expected negative growth in the first quarter compared to the fourth, but have seen positive sales gains. Case in point: Texas Instruments. TI expected a 5% sales decline in the first quarter, but had small positive growth. The company is also expecting second quarter sales to grow 10% over Q1 sales. For more see (p. 15)

Expect demand for digital signal processors (DSPs) and microprocessors (MPUs) for base transceiver stations (BTS) to grow dramatically over the next three years. The movement toward multimedia services and high-speed data transfers for cellular telephones will drive use of more DSPs and MPUs in cellular base stations. Worldwide DSP shipments for end use in BTS will increase from 2.8 million units in 2000 to 7.0 million by 2005. During the same period MPU shipments will increase from approximately 800,000 to 2.4 million, according to In-Stat/MDR.

Expect DRAM, SRAM and flash memory chips to get some competition from emerging memory technologies. MicroElectroMechanical Systems (MEMs), and write-once 3D memory technologies are in various stages of development at chip companies. Portable products where space savings and power consumption are important would benefit from the new technologies.

The connector industry had its worst year ever in 2001, according to a new report by Bishop and Associates. Connector industry sales fell 19.1% to $26.7 billion, ending eight consecutive years of growth. Connector sales are expected to increase 5% this year.