ABN-Amro sees $300 billion Chip market in 2002

David Wu, a chip industry analyst for Dutch banking and finance institution ABN-AMRO said this week he expects the global semiconductor industry to grow by 25 per cent in 2000, and 31 per cent in 2001, before starting a cyclical decline in 2003.

"We believe the semiconductor industry is just past the first anniversary of a four-year cyclical upswing that will peak at $300 billion in 2002 from the 1998 trough year at $126 billion and the initial recovery year 1999 at $144 billion," Wu said. "Growth should accelerate from 15 per cent in 1999 to 25 per cent in 2000, peaking at 31 percent in 2001 and 28 per cent in 2002. A cyclical decline should begin in 2003 as over-investment in 2001/2002 would cause pricing to be under pressure, more than offsetting positive unit volume growth."

Wu said the most attractive sectors for growth were those that sell to the wireless and Internet infrastructure providers, including Texas Instruments, Analog, National Semiconductor, Maxim Integrated Products, Linear Technology, Xilinx and Altera. In DRAMs recent under-investment will lead to under capacity in 2000/2001 and higher memory chip prices. Micron Technology in the U.S. and Samsung are likely to reap in the bulk of additional profits from DRAM chip shortages. Despite the apparent return of profitability in the DRAM maker, Samsung said this week it aims to sharply boost production of non-memory chips.

Samsung said non-memory semiconductor sales were expected to rise to $1.8 billion next year from a projected $1.2 billion this year, and further to $2.5 billion in 2001. "In preparation for the era of system-on-a-chip processors, we see the need to develop our non-memory semiconductor business and place our long-term goal at becoming a general semiconductor maker," a Samsung spokesman said. Samsung will have an overall capacity of 40,000 8-inch wafers a month by 2001, double the current capacity.