Dataquest reverses 2001 chip sales growth projections

In a radical about face, Dataquest is now seeing global chip sales growing only by a few percent this year. Just three weeks ago, the market research company foresaw market growth of around 15 percent in 2001. Chip-equipment sales may drop as much as six percent this year, compared to an earlier forecast of 11 percent growth for the year.

The complete reversal appears triggered by the sharp decline in chip sales experienced worldwide in the fourth quarter. Klaus-Deiter Rinnen, Analyst, Dataquest told chip and equipment industry executives at a conference this week that global semiconductor sales fell by some 15 percent in the fourth quarter from the third quarter.

"The December period was a pretty poor quarter for chip companies," Rinnen said. Because IC customers are now trying to get rid of inventory, chip sales in the first quarter will actually decline about four percent from a year ago. A recession in the chip and equipment industries is not likely at this point, following the US Federal Reserve's move to cut interest rates last week. 

But the industry is definitely seeing its fortunes reversing quickly. "The global trends are in the midst of reversing course,'' said Bill McClean, President, IC Insights. Added Dan Hutcheson, President, VLSI Research, "It's going to take time for the market to rebound. Chip sales will rise just five percent this year, compared with previous estimates of 11 percent.

That means chip-equipment sales will increase by just half a percent this year. That's after almost 90 percent growth in 2000. It was a pretty wild ride, and it was pretty amazing that the equipment industry was able to meet that,'' Hutcheson said.