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September 20, 1998

NT 5.0; JUST WHAT THE SEMICONDUCTOR INDUSTRY ORDERED?

By CBR Staff Writer

The introduction of Microsoft’s NT 5.0 and the continued growth of the PC sector could help kick the semiconductor industry back into action, analysts who follow the market claim. What they describe as one of the most brutal downturns in the history of the semiconductor industry is finally starting to bottom out, setting the stage for growth in 1999. One analyst, who follows the market for NationsBanc Montgomery Securities (NMS), said the launch of Microsoft’s Windows NT 5.0 server operating system would lead to a surge in microprocessor demand, as end users enter the next PC upgrade cycle. He added that the PC industry, which soaks up 54% of all semiconductors, needs to continue to grow, as does the communications market, which is already doing well with the sales of new equipment such as digital wireless handsets. Manufacturers should continue the rollout of semiconductor-based networking system software, the analyst said. He added that another factor in the potential recovery of the US- based semiconductor industry is the dramatic drop in production by the Japanese and Korean manufacturers, neither of which, he predicted, would be influential in the market for years to come. The analysts’ predictions come the same week as Japanese Electronics giant NEC Corp said it expects to record a loss of $151m in the six months to September 1998. The company cites decreasing semiconductor prices and slowing sales of communications equipment as the main contributory factories to the loss (see separate story).

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