Electronics Industry Update

Semiconductor International

Staff -- Semiconductor International, 9/1/1998

Worldwide Sales of Semiconductor Devices Historical Data: WSTS Forecast: Cahners Economics	Production Trends, Forecasts of Computers Historical Data: Federal Reserve Board Forecast: Cahners Economics
Production Trends of Electronic Components Historical Data: Federal Reserve Board Forecast: Cahners Economics	Production Trends, Forecasts of Consumer Electronics Historical Data: Federal Reserve Board Forecast: Cahners Economics

June computer industry (SIC 357) output was 1.9% higher than in May. Through May, monthly output gains have averaged 3.7%; so June's increase seemed modest. For the 12 months ending in June, cumulative computer/office equipment production grew 40.7%. There is evidence that growth in SIC 357 production is slowing. June's over-the-month increase was the smallest since last November. Production in the consumer electronics (SIC 365) sector fell 2.5% between April and May. This followed a drop recorded in March. Production in SIC 365 is running behind 1997. Through May, production fell more than 9% short of the January-May 1997 total. Output from the nation's communications equipment industry (SIC 366) was about the same in May as in April. After a weak beginning to the year, April production surged 2.5% above March. Despite May hesitation, cumulative production in SIC 366 ran 9.4% ahead of January-May 1997. May output was 8.8% better than May 1997. Electronics components industry (SIC 367) output rose 1% between April and May. Production seems to be on an even keel despite worldwide semiconductor prices. May production by SIC 367 firms was 28.3%

Key points:

• New fab starts peaked at $5 billion a month at the end of 1995.
• New fab starts were still high through mid-1996.
• There was some recovery in mid-1997.
• Since the first of 1998, new fab starts have declined.
• Decline in fab starts is heaviest in DRAMS, but across all product lines.
• New fab starts for 1998 will be $16 billion, 18% below the 1997 level.

*Equipment and facilities