Crisp outlook for chipmakers

Semiconductor chips are an integral part of computers. But then the fortunes of these two industries seem to be different. The semiconductor industry has been through some hard times recently. Now some relief seems under way. It is expected to grow 12.1 per cent this year. Initial estimates pegged the growth at 9.1 percent.

The semiconductor industry association expects the world-wide sales to be about $140 billion in 1999 as compared to $125.6 billion last year. The drivers for this growth would be the growth in the PC market, Internet and e-commerce related devices. There has been a big drop in prices and this estimate is inspite of this fall. The growth estimates are given below.

The Americas would be the major markets in the next four years. They would account for about a third of the revenues while the Asia Pacific market is expected to make its presence felt as it emerges out of the economic crisis in the region.

But the major market players in one segment of this industry, the DRAM (Dynamic Random Access Memory), have been Asian companies like Samsung, Hyundai, NEC, Toshiba and Micron. Of these the first three alone account for about 41 per cent of the market share (as per Dataquest figures) among them. Micron is the largest non-Asian chip company with about 11.7 per cent share.

But very few companies would survive this post crisis shakeout in this industry. These three Asian chip giants are expected to survive and thrive to the extent of increasing their share by about ten percent points. The top three have posted a whopping 78.5 percent ($12.04 billion) of the total sales of about $15.3 billion.