2002 will bring more chip consolidation after worst year ever, says Dataquest

2002 will bring more chip consolidation after worst year ever, says Dataquest
By Semiconductor Business News
December 20, 2001 (11:45 p.m. EST)
URL: http://www.eetimes.com/story/OEG20011219S0018

SAN JOSE -- The ramifications of the sharp semiconductor downturn in 2001 will be felt throughout 2002, warned Dataquest Inc. today, while releasing its preliminary ranking of chip suppliers for the worst year ever in industry history.

The San Jose-based market research firm also predicted that 2002 will bring further consolidation in the struggling chip industry. The consolidation in the depressed memory business is already underway with Micron Technology Inc. announcing on Tuesday that it will acquire a U.S. DRAM plant from Toshiba Corp., which plans to exit the commodity dynamic RAM business (see Dec.18 story).

When 2001 is finished, semiconductor sales are expected to drop 33% to $152 billion from a record high $227 billion in 2000, said Dataquest. All of the top 10 semiconductor vendors experienced revenue declines ranging from 19-to-49% (see table below). The prelimina ry ranking differs from other list issued by analysts recently partly because DRAM sales from NEC Corp. and Hitachi Ltd. have been placed under the Elpida Memory Inc. joint venture, said Dataquest.

Among the surprises in Dataquest's 2001 ranking is STMicroelectronics jumping from sixth place in 2000 to No. 3 this year, topping Samsung Electronics Co. Ltd. and Texas Instruments Inc., which are ranked No. 4 and 5, respectively. NEC dropped from No. 3 in 2000 to the sixth place.

As with other Top 10 rankings, Dataquest's estimates show Europe's STMicroelectronics falling the least this year, in terms of percentage. The European chip supplier's sales dropped 19.4% in 2001 from last year, according to Dataquest. Japan's NEC dropped the most with a 49.4% decline in revenues.

"The entrepreneurial model of building and investing in new technology went bust in 2001," said Mary Olsson, chief analyst for Dataquest's worldwide semiconductor group. "A downturn of this magnitude will be difficult for many comp anies to recover from in 2002," she warned.

"As is evident in the sizeable declines by most of the top vendors, the industry has undergone tremendous destabilization. We expect further consolidation of the industry during 2002," Olsson added.

Dataquest Ranking of Top 10 Chip Suppliers

Company	2001 sales	2000 sales	% change	2001 market share
1. Intel	$23.499 billion	$30.298 billion	-22.4%	15.5%
2. Toshiba	$7.136 billion	$10.864 billion	-34.3%	4.7%
3. STMicro	$6.360 billion	$7.890 billion	-19.4%	4.2%
4. Samsung	$6.320 billion	$10.585 billion	-40.3%	4.2%
5. TI	$6.000 billion	$9.202 billion	-34.8%	3.9%
6. NEC*	$5.389 billion	$10.643 billion	-49.4%	3.5%
7. Motorola	$5.000 billion	$7.678 billion	-34.9%	3.3%
8. Hitachi*	$4.724 billion	$7.286 billion	-35.2%	3.1%
9. Infineon	$4.538 billion	$6.711 billion	-32.4%	3.0%
10. Philips	$4.440 billion	$6.275 billion	-29.2%	2.9%
* DRAM revenue associated with Hitachi and NEC production is attributed to Elpida Source: Dataquest Inc.