Chips up in 1999

Chips up in 1999
Tom Foremski The global chip market will show strong growth in 1999 but this year it will face much slower growth than expected, says US market research firm Dataquest. Dataquest predicts that chip growth will be about eight per cent this year to become a $159bn market, compared with 3.5 per cent growth in 1997 and a market valued at $147bn. This year’s growth of eight per cent is less than half Dataquest’s prediction made some seven months ago and is due to continued falling prices for DRAMs. “The Asian financial crisis, low DRAM pricing and DRAM over capacity, and the general over capacity 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,” said senior Dataquest analyst Joe Grenier. Strong growth of 18 per cent is forecast for 1999, but the DRAM oversupply situation is likely to persist throughout 1999 with a DRAM shortage forecast for 2000. Meanwhile, fabless chip firms are doing very well, reports the Fabless Semiconductor Association (FSA), saying that a survey of its members shows they will need 45 per cent more silicon from their foundries this year. The FSA says fabless chip firms are growing faster than the overall chip industry, able to take advantage of excess chip manufacturing capacity worldwide, and lower prices from Asian based foundries. The majority of fabless chip firms say that most of their chips will be manufactured in 0.35?m or below this year, and they expect to raise production by 30 per cent in 1999.


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