Oversupply and the Asian economic crisis are expected to take their toll on the semiconductor market, according to a report from Dataquest.
The research company has revised its growth forecast for 1998, pushing it down to seven per cent from 17 per cent, which translates to total market volume of around US$160 billion, as opposed to the earlier $175 billion prediction.
Analysts in Bangkok said the economic crisis in Korea will send shock waves through the global market. 'Following the devaluation of the won, the Koreans do not have enough money to pay for new wafer plants,' said one analyst in Bangkok, adding that Samsung and Lucky Goldstar have reportedly put wafer plant plans on hold.
Jim Handy, director and principal analyst for Dataquest's Memories worldwide programme, said: 'Going into 1998, Dataquest sees a continuing overcapacity, forcing manufacturers to continue their efforts to keep prices low.'
The crisis in Asia, which has seen local currencies tumble dramatically against the US dollar, is also likely to impact sales in the semiconductor market.
Dataquest reported that its sales volume forecasts could be revised downwards by another $3-5 billion because of potential lower costs of DRam memory chip manufacturing in South Korea.
Semiconductor manufacturers in Korea may be forced to consolidate with competitors or risk being pushed out of the market. One analyst said: 'The Korean government has already told some companies to get out of the industry.'
He added: 'The DRam market is moving too fast. In 1996, a 64Mb DRam cost $250. Now the same product costs just $28.'
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