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SIEMENS SAYS CHIP BUSINESS SHOULD TRIPLE IN SIZE BY 2001

Siemens AG was talking in Munich yesterday about its chip business, saying that it expects overseas expansion and strategic partnerships to achieve a near tripling of sales to around $8.3bn by 2001. Siemens Semiconductors forecasts 26% annual sales growth over the next five years, a big advance on the 15% forecast for the chip market as a whole during that time. But the growth this year will be limited by sharp declines in chip prices over the last 15 months. Most of the growth will come in Asia and the US, where Siemens, now the world’s 12th-largest chipmaker, forecasts annual semiconductor market growth of 15% and 16% respectively, between now and 2001. It is forecasting chip market growth of only 6% this year, accelerating to 18% in 1998 and 22% in 1999. As with most of its businesses, Siemens plans to expand manufacturing capacity outside Germany. It also plans to link up with other chip companies. It reckons that chip prices, which plummeted about 80% on some products, notably memory, in the past year, should stabilize next year as the Internet, expanding corporate networks, increasing use of cellular phones and wireless communications drive demand for semiconductors. Falling prices caused its chip business net profit to fall 24% to $357m. Sales last year grew only 1% in Germany and in the rest of Europe to $1.006bn and $710m respectively. In North America, sales rose 38% to $458m, and in Asia, 23% to $515m.

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CBR Staff Writer

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