EL SEGUNDO, Calif. -- Inventory gluts, excess capacity, and other factors will cause the worldwide semiconductor market to decline by 19% in 2001, according to a new report from iSuppli Corp. here today.
"While there is good news for some market segments, we forecast a 19% decline in worldwide semiconductor revenue this year, as bloated inventories continue to put a damper on unit ordering and prices," said Greg Sheppard, vice president of market intelligence services for iSuppli. The El Segundo, Calif.-based company provides supply-chain management and related services.
There is more good and bad news for the industry. "When order and revenue growth does begin to pick up in the third quarter, it will be at a slow rate due to soft demand from the main market drivers," Sheppard said. "Add this soft demand to the new fab capacity coming online and downward price pressure for many semiconductor commodities--particularly memory, microcomponents, and many ASSPs--is unavoidable," he said.
On the plus side, Sheppard noted that the PC sector has reached inventory equilibrium--even though unit growth rates are nearly half of what they were a year ago.
There is also hope for the communications chip markets. The wireless market is expected to return to replenishment ordering by June, he said.
"But even after the huge inventory write-downs taken by Cisco and other major players, the overall networking sector will remain moribund until the fourth quarter," Sheppard said.
"In fact, the FPGA/PLD suppliers serving this market are still holding six months of inventory, and are clearly in the worst shape of any group of semiconductor manufacturers," he added.
