STMicroelectronics economist predicts semiconductor industry growth in 2002

November 26, 2001 – Geneva, Switzerland – The chief economist of STMicroelectronics NV said the chip industry is beginning to show signs of a recovery, with double-digit growth coming by the end of 2002 and a broader rebound in 2003.

Jean-Philippe Dauvin, corporate VP for education and knowledge, is predicting roughly 0% growth for the sector in 2002. But he expects momentum to pick up by the end of next year, with a 20 or 25% increase in revenues in the fourth quarter of 2002 compared to the current quarter, reported the Wall Street Journal. The chip industry could see growth in the “high 20s” in 2003, he said.

An ST spokeswoman said nothing has changed from the forecast the company had released previously, but Dauvin’s comments offer a broad view of how the chipmaker sees the sector performing over the next two years.

Gartner Dataquest estimates global chip revenues will rise 3% next year and jump 30% in 2003. That compares to a 35% drop this year, according to Gartner Dataquest.

Dauvin sees an exit to the current slump through a pickup in business spending on technology, among other things. He said desire for higher productivity combined with low interest rates that encourage capital expenditures mean companies will invest in new high-tech equipment that uses semiconductors.

“Inventories are over [for the chip sector], demand is picking up, prices are down,” said Dauvin. He said low semiconductor prices are a key element missing for a recovery by chipmakers. But he predicted prices would start bouncing back next year.

Dauvin declined to give specific growth forecasts for ST. ST CEO Pasquale Pistorio last month predicted flat sales in the current quarter compared to the previous three months, and declined to give company forecasts for next year. Mr. Pistorio estimated that ST’s revenues will fall 16 to 20% this year.


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