While the semiconductor industry could start seeing a rebound later this year, worries about the Asian Pacific market are still likely to put a dent in any significant strengthening until the middle of next year, according to a Dataquest report.
``Although the microprocessor market should rebound in some regions during the fourth quarter of 1998, the global impact of weak Asian economies means key semiconductor markets will likely not strengthen until the middle of 1999,'' said Joe Grenier, vice president and director of Dataquest's semiconductor device programs. ``The semiconductor market will continue to confront oversupply. The foundry oversupply will persist for the next 18 months, and the DRAM oversupply will last until mid-or-late 2000.''
Despite the uncertainty surrounding that geography, the worldwide semiconductor market is forecast to grow 11.8% in 1999, up from a 6% decline this year. Dataquest said.
Europe is the only region projected to maintain positive growth in 1998. The European semiconductor market is pegged to grow 1.4% this year.
Japan is expected to decline 15.8% in 1998, while the Americas region is predicted to drop 4.7, and Asia-Pacific could see a 3.5 decline.
Some of the uptick expected for the last quarter of 1998 stems from increased orders coming in from PC OEMs preparing for the busy holiday selling season and replenishing inventory that was burned off earlier this year when a glut of PCs was pushed through the channel.How sustainable the growth will be is still a question among various Wall Street watchers and industry observers, particularly in light of the continued weakness in Japan and the possibility of currency devaluations spreading to China, which has been able to avoid many of economic ripples caused by problems in nearby Pac-Rim countries.
``Despite the positive growth we anticipate for 1999, the industry still faces a stiff challenge," added George Shiffler, senior analyst with Dataquest's worldwide Research Operations group.
"Under current economic conditions, demand throughout Asia, including Japan, for semiconductor-based products will remain sluggish at best."