Electronics Industry Update

Worldwide Sales of Semiconductor Devices Historical Data: WSTS Forecast: Semiconductor International	Production Trends and Forecasts, Electronic Components Historical Data: U.S. Department of Commerce Forecast: Semiconductor International
Production Trends and Forecasts, Computers Historical Data: Federal Reserve Board Forecast: Semiconductor International	Production Trends and Forecasts, Consumer Electronics Historical Data: Federal Reserve Board Forecast: Semiconductor International

Worldwide semiconductor sales rose 1.5% October-November, following an 11.4% drop September-October. The longer-term outlook for the semiconductor market continues to improve. November sales were off 3.2% from November 1997; through September, sales averaged 10.4% less in a given month when compared to the same month in 1997. Chip sales through November were 9.4% lower than January-November 1997. The average selling price of all semiconductors was 0.6% higher in November than November 1997. This was only the second time since March 1996 that average semiconductor selling prices for a given month were equal to or higher than prices in the same month a year earlier. The dollar value of DRAM sales in November was 2.2% ahead of its year-earlier level. November DRAM sales improved 12.9% on the October total. Through November, the dollar value of semiconductors sold to Europe was 1% above January-November 1997. Eleven-month 1998 sales to the Asia/Pacific (excluding Japan) region fell 5.4% below January-November 1997. Double-digit declines were recorded in sales to the Americas (-10.6%) and Japan (-20.5%).

Fab Watch

Source: Strategic Marketing Associates

Key points:

• In response to eight months of continuously falling chip sales, new fab projects all but died in the third quarter of 1998.
• There has been a slight upswing in new fab projects in the fourth quarter of 1998.
• Total value of new fab projects in 1998 was $17 billion, down 15% from 1997.
• Given that chip sales are still rising, we expect 18% growth in new fab projects this year.
• We also expect the number and value of fabs opening this year to increase over 1998.
• There will be a significant increase in new foundry construction this year over 1998.

Strategic Marketing Associates is a market research company whose focus is on the fab. For information about capital spending and new fab projects, contact Strategic Marketing Associates at 831-464-2669.