Double-Digit Growth Expected in 1999

Staff -- Semiconductor International, 6/1/1998

Though the worldwide semiconductor market is experiencing its third consecutive year of lackluster performance, it is expected to return to strong growth in 1999 when the market is forecast to grow 18%, with revenue surpassing $188 billion, according to Dataquest (San Jose, Calif.), a unit of the Gartner Group. The semiconductor industry is forecast to grow 8% in 1998, with revenue projected to reach $159 billion. In 1997, the market grew 3.5%, with revenue reaching $147 billion, and in 1996 the market declined 6.3%.

"The Asian financial crisis, low DRAM pricing and DRAM overcapacity, and the general overcapacity and pricing pressures that exist in other product segments will hamper semiconductor revenue growth this year, although some product segments will achieve robust double-digit growth rates," said Joe Grenier, vice president and director of Dataquest's Semiconductor Device programs.

Even with single-digit growth in 1998, the semiconductor industry is expected to nearly double by 2002, with revenue approaching $288 billion. Dataquest analysts said DRAM pricing will dictate the growth in the industry along with developments in Asia.

"Low 1998 DRAM pricing is the primary reason that the worldwide semiconductor market will grow at only a single-digit rate this year. There is excess DRAM capacity this year, and we believe that the DRAM oversupply will persist throughout 1999," said Grenier. "The long-term forecast assumes a DRAM capacity shortage starting in 2000, followed two years later by excess DRAM capacity."