CPU revenues to show decline in growth

But Dataquest forecasts worldwide semi sales to grow in 1999

The slump in semiconductor sales in 1998 is likely to be followed by growth of 12 per cent next year, according to a forecast from Dataquest. But the market research firm said that its forecast was a sharp downgrade from its previous 1998 expectations for both growth rate and revenues. And sales of CPUs will show a sharply reduced rate of growth, Dataquest predicted. According to DQ figures, revenues will amount to $138 billion this year, compared to $147 billion last year. Weak Asian economies mean that the key semiconductor markets are not likely to strengthen until the middle of next year. DRAM, which has played a significant role in the worldwide slump, will first stabilise and then grow next year, with revenues amounting to $155 billion in 1999. The future is more rosy, the forecast said, with the worldwide market worth $250 billion by the year 2002. That prediction is echoed by US trade association, the Semiconductor Association. Dataquest bases its forecasts on the assumptions that worldwide PC shipments are set to grow by 15 per cent, despite the fact that average selling prices will fall. The semiconductor market will suffer from oversupply for the next 18 months, while DRAM oversupply is set to last until the middle or the end of the year 2000, Dataquest said. Factors for growth in the future include the rise of the Internet, while Europe will see growth in both PC and mobile handset production. While consumer electronics will continue to grow in the Americas, other world regions will show weak demand, said Dataquest. However, Dataquest cautions that its figures could be knocked skewiff by a deeper decline and slow recovery in Asia, US economic downturn, delay of access technologies including ADSL, and Rambus. High growth areas for the semiconductor market include DSPs (digital signal processors), cell based ICs and programmable logic devices, flash memory and EEPROM, the forecast said. CPUs will grow at a rate of 11 per cent in 1999, and will represent $38 billion of semiconductor sales in the year 2002. This, said Dataquest, is sharply lower than prior revenue forecasts. ®

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