The semiconductor industry will plod its way through another lackluster year of low growth in 1998, but the business is expected to finally rebound with 18 percent growth in 1999 after pricing pressures and the impact of Asia's economic crisis subside, Dataquest said it predicted Monday.
San Jose, Calif.-based Dataquest, however, has bad news for dynamic RAM suppliers, which are suffering from low average selling prices due to overcapacity. The market researcher now said it predicts the glut of memories will continue throughout 1999 with a shortage beginning the following year. If so, that is one year later than most DRAM suppliers expect.
In reiterating its downgraded 1998 forecast announced a couple months ago, Dataquest said it sees better times for most chip makers next year with industry revenues surpassing $188 billion compared with an expected $159 billion in sales worldwide this year. Dataquest predicts semiconductor revenues will grow 8 percent in 1998 following last year's anemic 3.5 percent increase to $147 billion. In 1996, chip sales dropped 6.3 percent.
"The Asian financial crisis, low DRAM pricing and DRAM overcapacity, 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," concluded Joe Grenier, vice president and director of Dataquest's Semiconductor Device programs.
Further out, Dataquest said it is predicting worldwide semiconductor revenues will reach $288 billion by 2002. A growing number of semiconductor managers, economists, and analysts are changing their views of the industry's immediate growth patterns after three years of sluggishness in worldwide chip markets. Several years ago, some industry observers predicted the chip industry was heading into a period of less volatile changes in growth rates, but few believe that now primarily because of the fickle nature of DRAM devices.
"Low 1998 DRAM pricing is the primarily reason worldwide semiconductor markets will grow at only a single-digit rate this year," Dataquest's Grenier said. "There is excess DRAM capacity this year, and we believe the DRAM oversupply will persist throughout 1999.
"The long-term forecast assumes a DRAM capacity shortage starting in 2000, followed two years later by excess DRAM capacity," he added.