IT industry to suffer 'til year end

AN ANALYST AT Semico told the Platform Conference in San Jose last week that the "IT industry restructuring" will carry on for most of this year.

And in a possibly coincidental juxtaposition with this fact, Shelly Garber of Semico, said that by 2002 "most of the inventory" will be absorbed by the market. That stock, in 2002, will be nearly 18 months old, and any left over inventory will be scrapped, Gerber suggested.

But Garber had good news for those not on the scrapheap, and suggested that the "bottom of the market" will occur in Q4 of this year, with semiconductors recovering in 2002 and growing in revenues by 25 per cent.

PCs, Garber claimed, no longer drive the development of new semiconductor technology. The growth segments are broadband comms, wireless infrastructure and Internet services.

Demand for DDR SDRAM will be hampered by the avilability of server chipset firms, while delays in G3 phones will affect demand next year. Rambus RDRAM will be decided by demand for Pentium 4s.

Semico thinks that the 2001 forecast of $14.2 billion will decline by 50.9 per cent, the slump being determined by the world economy, and the amount of stock piled up everywhere. DRAM revenues will be around the $16.9 billion mark.

There will be some good bargains in Q3, and Semico says that XP will help sales of memory, as it requires 128MB minimum, meaning 192MB is a lot better.

In 2002, SDRAM will start to be replaced by DDR memory in the notebook market, and Semico expects that 2002 units will be up by 10 per cent.

Emerging products will help drive demand, including game machines, arcade and gambling machines, digital cameras, PDAs, digital TV and kiosks over the next four years.

Smartphones, whether 2.5 or 3G, will need low power memory but this will be a major new market for the manufacturers.

Rather than consolidating, the DRAM market is fragmenting further, with SDRAM, DDR, EDO, FPM FCRAM, RLRAM, RDRAM, VCRAM, EDRAM, and low power devices. That's certainly a lot of RAMs.

There will be specialised kinds of memory like the UtRAM from Samsung for cellphones, and the BAT-RAM from Micron.

Semico, which has never been particulary pro-Rambus, doesn't see much of a future for RDRAM, surprise surprise.

But by 2005, DRAM wil cost a mere $0.015 per megabit. µ