Oversupply and Asian economic turmoil are going to take their toll in the semiconductor market according to a new report from Dataquest.
Dataquest has revised its forecasts for 1998 downwards to seven per cent growth from 17 per cent. In dollar terms this translates to total market volume of around US$160 billion as opposed to an earlier prediction of $175 billion.
Analysts in Bangkok say that the economic crisis in Korea, home to some of the world's largest semiconductor manufacturers, will send shock waves through the global market. "Since the devaluation of the Won, the Koreans no longer have enough money to pay for new wafer plants," said a market analyst in Bangkok, adding that both Samsung and Lucky Goldstar have reportedly put wafer plant plans on hold.
Over the past decade there has been massive expansion in semiconductor production in Asia. Growth in Thailand, for example, has been around 500 per cent. Oversupply has been key to pushing down semiconductor prices on the global market. "Going into 1998, Dataquest sees a continuing overcapacity, forcing manufacturers to continue their efforts to keep prices low," said Jim Handy, director and principal analyst for Dataquest's Memories Worldwide programme.
The crisis in Asia, which has seen local currencies tumble dramatically against the American dollar, is also likely to impact sales in semiconductor market. Dataquest reports that its sales volume forecasts could be revised downwards by another $3-5 billion because of the potential lower costs of Dram memory chip manufacturing in South Korea. "Lower cost of manufacturing would result in lower market prices for Dram," said Dataquest.
One likely effect of the crisis is that major semiconductor manufacturers in Korea will be forced to consolidate with competitors or risk being pushed out of the marketplace. "The Korean government has already told some companies to get out of the industry," said an analyst in Bangkok. Other major manufacturers, such as Texas Instruments, have also been pruning their semiconductor operations.
"The problem in the Dram sector is that market is moving too fast. In 1996 a 64Mytes Dram cost $250 now the same product costs just $28. Those that can get their product to the market first make money," he added.
For those with an eye on the horizon, Cmos non-memory semiconductors, mainly used in telecomms products offer the brightest hopes. Strong demand for telecomms products has pushed companies like Motorola, Texas Instruments and Lucent Technologies to ramp up their Cmos semiconductor production.
IBM and Technical University of Munich team demonstrate how Shor's algorithm, which can't be cracked by conventional computers, can be solved quickly with quantum computing
Hubble Space Telescope finds superflares from young red dwarfs could strip away planetary atmosphere
Younger stars are 100 to 1,000 times more energetic than when they're older
Two of the big four supermarkets will use the system to control sales of restricted products
PUBG news and updates: November's Update #23 to bring new Skorpion pistol and changes to blue zone visibility
Genuinely useful side-arm coming to PUBG in Update #23