Commentary: New IBM plant portends solid growth

By Klaus Rinnen and Dean Freeman, Gartner Dataquest Analysts

IBM's plans to build a $2.5-billion, state-of-the-art semiconductor plant in New York offer further proof that despite some recent reports to the contrary, the semiconductor component market is thriving.

IBM says its new facility will have leading-edge manufacturing

	See news story: IBM to pump $5 billion into chipmaking operations

capabilities that will enable increased chip performance. Indeed, the new center will be fast-tracked to begin mass production of high-performance logic and application-specific chips for use in high-end server and communications applications.

Dataquest, a unit of Gartner, has forecast robust revenue growth worldwide for semiconductor manufacturers, which are laboring mightily to supply the hot, new device applications under development. The global semiconductor industry is on pace to have revenue exceed almost $232 billion in 2000--an increase of 37 percent over 1999 revenue.

Semiconductor makers' revenue growth is being fueled by new applications driving consumption beyond the PC realm and into new communications applications. In fact, the strength and emergence of communications provide a diversification in demand and underline the future growth potential of the semiconductor industry.

Dataquest estimates growth in communication devices will outpace PC growth. With it, semiconductor consumption in 2004 for communications applications is estimated to exceed that for PCs, traditionally the largest consumer of chips.

Recent industry fears of a looming downturn comparable to the semiconductor slump of 1995 are unwarranted. Electronic equipment demand should remain solid for 2001, and the semiconductor industry is still early in its construction cycle for fabrication plants.

(For related commentary, see on forecasted worldwide semiconductor growth rates, see Dataquest.com.)

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