SCOTTSDALE, Ariz. -- Here's a double-whammy for the semiconductor business: IC Insights Inc. here today lowered its worldwide chip forecast for 2002, and projected that capital expenditures would fall another 25% next year over 2001.
IC Insights originally projected that the worldwide semiconductor revenues would grow by 16% in 2002 over 2001. Now, the Scottsdale-based market research firm projects that the IC market will only grow by a mere 1% next year over 2001.
In total, the worldwide chip market is projected to decline from $204.4 billion in 2000 to $137.2 billion in 2001, IC Insights said. In 2002, the market is projected to inch upwards to $137.95 billion, the new forecast said.
IC Insights attributed the new forecast to inventory gluts and lackluster demand in the market. "IC Insights believes that overcapacity will still be a problem in 2002," the research firm added.
There's more bad news for suppliers to chip makers. The research firm now predicts that semiconductor capital spending will fall by 32% to $41.5 billion in 2001. But in 2002, capital spending is projected to fall another 25% to $31.1 billion worldwide, said IC Insights. In 2000, semiconductor capital spending hit a record high of $60.8 billion.
Even Intel Corp. is projected to reduce its capital spending by 40% in 2002. Intel is projected to spend $7.5 billion in 2001, but only $4.5 billion in 2002, according to IC Insights. Other reports this week have placed Intel's target for 2002 capital expenditures higher at $6.0-to-$6.8 billion (see Oct. 22 story).
In any case, the trends do "not bode well for the equipment industry in 2002," said IC Insights' new report.
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