Electronics Industry Update

Staff -- Semiconductor International, 2/1/1998

Economic Indicator

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Semiconductor Equipment Monitor

Devices continue to rebound from a poor year in 1996. Six percent growth is projected for 1997 and 12.1% growth for 1998. In Europe, growth is expected to accelerate to 14% in 1998. Falling prices will curtail some growth in the dollar-value of shipments of office and computing machines. The sub-$1000 PC and the entrance of various thin-client network PCs has spurred unit growth, but the corresponding cheaper prices add less to the bottom-line on a "per unit" basis. This demand for cheaper end products is filtering back into electronic components. This sector continues to grow, but prices are under increased downward pressure. The communications equipment sector is poised for accelerating growth because of the desire for mobility and the increase of Internet popularity. Within the U.S. economy, the hot pace set in 1997 will cool somewhat in 1998. Gross domestic product, business investment and industrial production will all be down from 1997 but will remain at healthy growth levels.

**Table 1.** Semiconductor Device Sales Trends by Regional Market
	U.S. $BILLIONS				% Change From a Year Ago
	TOTAL		PROJECTED		TOTAL		PROJECTED
	1995	1996	1997	1998	1995	1996	1997	1998
World	144.40	131.97	139.89	156.85	41.7	-8.6	6.0	12.1
Americas	47.00	42.68	47.19	54.05	40.0	-9.2	10.2	14.5
Japan	39.66	34.18	33.71	37.29	35.0	-13.8	-1.3	10.6
Europe	28.20	27.56	29.21	33.32	42.9	-2.3	6.0	14.1
Asia/Pacific	29.54	27.55	30.03	33.19	54.1	-6.7	8.3	7.2
ICs	126.06	114.94	122.24	136.79	43.0	-8.8	6.4	11.9
Discretes	18.35	17.03	17.44	19.71	33.7	-7.2	2.5	13.0
Historical Data: WSTS				Forecast: Cahners Econmics

Table 2. Business Investment Trends and Forecasts for Major European Markets

Table2. Key Statistics
for the United States

(% Change from a year
ago)

1996

1997

1998

Gross Domestic Product

2.8

3.7

2.6

Business Investment

9.2

10.4

8.7

Industrial production

2.8

4.7

3.5

Producer prices

2.7

0.5

1.3

Employer costs

2.8

3.1

3.4

Source: Consensus Economics Inc.

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