Goldman Sachs & Co. Wednesday forecast the 2002 semiconductor market to be flat with 2001 but only if holiday demand for PCs proves to be as strong as OEM orders have led suppliers and investors to believe.
Prior to Sept. 11, the New York-based investment firm had stronger conviction that the year-end shopping season and the release of the Windows XP operating system would bring a nice rebound in the PC sector, and spur a gradual resumption of growth into next year.
However, the terror attacks "took the wind out of my sails," said chip analyst Terry Ragsdale, who said he's now "worried about PC sell-through in the fourth quarter," as a result of slumping consumer confidence, and corporate PC purchases that have been put on hold.
Assuming a slight uptick in fourth quarter semiconductor sales followed by a typically flat first quarter, "we're going to need double digit sequential growth Q2 through Q4 to get anything greater than zero growth for the year," Ragsdale said Wednesday at a Goldman Sachs media briefing in Palo Alto, Calif.
DRAM bit growth for 2002 is expected to be in the range of 40% to 50%, down from historical 90% levels, analysts said.
Meanwhile, capital spending by fab equipment makers will decline another 15% in 2002, coming off of a 30% slide this year, said semiconductor equipment analyst James Covello.
One bright spot appears to be the wireless handset market, where semiconductor inventories have leveled out and suppliers are reporting sequential revenue improvements beyond expectations.
Communications IC analyst Nathaniel Cohn said recent robust ordering of chips for wireless handsets could be sustained through the first quarter, bucking the usual pattern of first-quarter contraction.
Analysts cautioned, however, that over-confidence now could pull wireless handset and PC makers back into the inventory trap of the past year.
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