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Tech Industry

Chips sales expected to rise

The Semiconductor Industry Association forecasts brisk 16.8 percent growth in 1998, with memory chips leading the way.

    The Semiconductor Industry Association today released its forecasts for the global chip market, predicting that it will expand at a brisk 16.8 percent in 1998. Rebounding from a sluggish 1997, memory chips will lead the way.

    Chip sales grew by 5.5 percent in 1997 to $139.1 billion, hampered by a continuing decline in DRAM pricing. DRAM, or dynamic random access memory, is the principal type of memory used in almost all PCs. Currency fluctuations also contributed to a smaller growth rate in terms of dollars, the SIA said.

    The expected rebound in 1998 will likely be aided by today's news that China will eliminate tariffs on information technology products by agreeing to join the Information Technology Agreement (ITA).

    China is the fastest growing market in the world for chips, according to the SIA. The organization points to research from Dataquest that predicts the Chinese market for semiconductors will grow from $8.3 billion this year to $17 billion by the year 2000.

    "China's elimination of tariffs on information technology products--including semiconductors--marks a major step forward in the integration of China into the world economy. China's decision to join the ITA is the most important economic outcome achieved at this Clinton-Jiang summit for America's high technology manufacturers," said Jerry Sanders, chairman and CEO of Advanced Micro Devices, in a prepared statement. Sanders is also chairman of the SIA Board of Directors.

    Meanwhile, continuing growth in Internet use along with the increasing use of semiconductors in consumer devices will push the semiconductor market to $232 billion by the year 2000, the study showed.

    Statistics reveal that microprocessor sales, the core "brains" of a computer, represented $23.6 billion of the overall market for semiconductors in 1997 and is expected to grow to $28.4 billion (a 20.4 percent increase) in 1998. This compares to sales of DRAM, which this year slid 16.9 percent from 1996 levels to $20.8 billion. DRAM sales are predicted to grow by 20 percent next year, however.

    The SIA notes that the U.S. market continues to soak up the majority of processors, with 44.3 percent of worldwide microprocessor sales destined for PCs here. Europe was second, accounting for 25 percent of microprocessor sales.