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Study: Chip revenue up in '99

A new report predicts the semiconductor industry will grow 11.8 percent in 1999 following a 6 percent decline in 1998.

It's not over, but the so-called Asian flu may be easing, according to Dataquest in a new study that predicts the semiconductor industry will grow 11.8 percent in 1999 following a 6 percent decline in 1998.

Dataquest analysts estimate worldwide semiconductor revenue will reach $155 billion in 1999. The forecast for the semiconductor market, excluding the volatile dynamic random access memory (DRAM) market, is for revenue to reach $124 billion in 1999, an increase of 9.7 percent over 1998 revenue.

"Although the microprocessor market should rebound in some regions during the fourth quarter of 1998, the global impact of weak Asian economies means key semiconductor markets will likely not strengthen until the middle of 1999," said Joe Grenier, vice president and director of Dataquest's Semiconductor Device programs, in a statement.

Europe stands out as the only geographic region projected to maintain positive growth in semiconductor sales in 1998, according to Dataquest.

The European semiconductor market is forecast to grow 1.4 percent in 1998. Japan is expected to decline 15.8 percent in 1998, while the Americas region will drop 4.7 percent, according to the forecast. Asia/Pacific, meanwhile, will likely account for a decline of 3.5 percent for the year.

The report is the latest bit of good news for chipmakers. Recently revised earnings projections on companies like Intel point to a fairly good second half of 1998. And memory prices in that volatile segment have been stable for six weeks.

Last week, International Data Corporation predicted that worldwide PC shipments will rebound to grow 13.2 percent in 1999, spurred by strong demand for lower-cost machines.

The United States and Western Europe will play a major role in helping the PC industry bounce back from slowing growth this year, according to IDC. Unit shipments are expected to rise to 89 million units globally from a forecast of 80.2 million in 1998.

Nonetheless, some doubt that a sustained recovery can be maintained on the backs of the Western economies alone.