Cahners In-Stat Announces: Semiconductor Market to be Down 15.8 Percent in 2001.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--May 15, 2001

Despite the fact that 2000 was a great year for the semiconductor industry, with revenues increasing by 36.8 percent to a record $204.4 billion, that level of growth is unsustainable over the long term, according to Cahners In-Stat Group (http://www.instat.com).

The high-tech market research firm foresees that worldwide semiconductor revenue will decline dramatically in 2001 with early quarters showing a significant sequential downturn and the recovery beginning in the second half as inventories are worked off and the slowing economy remains as the major problem.

"Even though growth in 2001 was bound to be lower, the overall economic slowdown and crash of the dot-coms has caused the semiconductor slowdown to occur sooner and more abruptly than previously expected.

"Instead of slower growth, we expect a reversal of direction in 2001 with worldwide semiconductor revenues falling by 15.8 percent to $170 billion," said Steve Cullen, director of In-Stat's Semiconductor Group.

"Although the sales growth of key end products including PCs, cell phones and networking hardware has slowed, most of these segments will exhibit some unit growth in 2001. However enough of the unit growth will be satisfied by existing inventory that semiconductor unit growth is also expected to decline, by 10.8 percent to 333 billion."

Although there were major additions to semiconductor capacity during 2000, the industry has responded to the current slow down by reducing capital spending more abruptly than ever before. This has minimized over capacity and is expected to result in recovery that will be nearly as fast as the decline.

Accordingly, beyond 2001, In-Stat forecasts both unit and revenue growth in 2002 and a return to more normal growth patterns by 2003.

In-Stat has also found that:

-- With worldwide integrated circuit wafer capacity at about 5 million
equivalent 8" wafers per month and recent new 8" fabs typically sized
at 25,000 wafers per month, each new fab adds about 0.5 percent to worldwide
capacity.

-- EDP is the largest segment of the semiconductor market. It was responsible
for 50.7 percent of all semiconductor sales in 1999. Despite the rapid growth
in some other markets, the EDP markets will continue to dominate semiconductor
sales for some time to come.

-- ASPs are also expected to decline in 2001, by 5.7 percent to $0.517, as
capacity exceeds demand for most part types.

The report, "Semiconductor Product Market Forecast" (No. SI0103MF), presents In-Stat's five-year semiconductor forecast broken out by major product type supported by a discussion of economic and industry conditions and outlook.

To purchase this report, or for more information please visit http://www.instat.com/catalog/cat-si.htm#si0103mf or contact Erin McKeighan at 480/609-4551; [e-mail]. The report price is $2,995 USD.

Cahners In-Stat Group (http://www.instat.com/) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.

In-Stat is a unit of Cahners Business Information (www.cahners.com), a leading provider of critical information and marketing solutions to business professionals and a member of the Reed Elsevier plc group.