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Chip biz to shrink 5.5% next year

No recovery 'til 2003

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The world semiconductor business will shrink by 5.5 per cent next year, market watcher Future Horizons has forecast.

"Q4 will be flat on Q3's already lacklustre performance," the company said. "This will delay the market recovery by at least two to three quarters, and negative dollar growth in 2002 is inevitable."

That's in contrast to Gartner Dataquest's recently issued prediction that the market will grow a mere three per cent in 2002.

Both figures should probably be taken as a maximum and minimum change on 2001's sales. But given this year's dire market conditions - with sales down 33.2 per cent on 2000's total, according to Future Horizons - even a mere three per cent increase through 2002 would give the chip industry an important psychological boost.

That's particularly the case given Future Horizons' other prognosis proves correct: that the industry isn't going to match last year's record sales before 2004. That's in accord with Gartner Dataquest's numbers - growth with will hit 30 per cent in 2003, taking total annual chip sales to $197.6 billion, just under 2000's $200 billion.

Future Horizons had previously forecast, like Gartner Dataquest, slight growth next year, but the events of 11 September, the economic downturn, maturing PC and mobile markets, and far, far more fab capacity than is required have all combined to zap demand and prices. ®

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