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Market researcher expects chip market will shrink in 2002








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London-based market research firm Future Horizons said it expects a 5.5% decline for the 2002 worldwide semiconductor market. It had previously been anticipating a slow positive growth.

At the same time, the firm downgraded its 2001 forecast, from -25.6% to -33.2 percent.

With the 2002 market now pegged at $129 billion, a level not seen since 1996, Future Horizons forecasts that the industry will not now recover its $200 billion, 2000 value until 2004.

The current industry predicament was blamed on a weak global economy, dampening end user demand; maturing PC and mobile markets, completely devoid of any new "must have" features; and severe excess wafer fab capacity -- currently twice what the industry actually needs.

Comfortable that this year's excess inventory problem is no longer a major issue, it does predict a modest 6.9% IC unit growth forecast for 2002, but believes this is not sufficiently strong to counter the negative impact that overcapacity will have on average selling prices (ASPs).

"The events of September 11 now mean Q4 will be flat on Q3's already lacklustre performance. This will delay the market recovery by at least two to three quarters, and negative dollar growth in 2002 is inevitable," the company said, adding that it would be the first time in the history of the semiconductor industry that there have been two consecutive negative growth years.











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