Semiconductor Market Seen Shrinking by 13.5% This Year

The global semiconductor market probably will shrink 13.5% in 2001 to $176.8 billion because of sluggish demand for personal computers and cell phones, the World Semiconductor Trade Statistics group said Monday.

The forecast is a sharp downturn from a 36.8% jump last year to a record $204.4 billion and would mark the biggest decline in a decade.

WSTS, which represents about 70 chip makers worldwide, in October predicted 20% growth in the chip market for 2001, but a sudden slowdown in demand for information technology products late last year has taken its toll.

The industry group said demand for personal computers and mobile handsets could pick up in the second half of this year. It forecast 5.3% quarter-on-quarter growth for the July-to-September period and 7.3% growth from October to December.

“But demand for semiconductors that are used in the infrastructure of the Internet, which was a growth driver last year, may remain sluggish in 2001,” said Osamu Yamashiro, head of WSTS Japan.

The DRAM, or dynamic random-access memory, segment of the semiconductor market also is expected to remain depressed, diminishing 36% to $18.5 billion this year.

The industry group said the global chip market probably would return to growth in 2002, expanding 13.9% to $201.4 billion.

In Japan, the WSTS forecast the semiconductor market this year would dwindle 7.2% to $43.38 billion.

Yamashiro said the Japanese market probably would remain relatively buoyant, however, because of strong demand for notebook computers and mobile handsets.

He said digital home appliances could boost Japanese chip demand.