June 2, 2002 10:43am
06/03/2002
The expression "World Cup Cycle" is in vogue lately in Korean semiconductor circles.
World Cup Cycle was coined to refer to a four-year business cycle in the semiconductor industry, just as the World Cup is held every four years.
The word first became popular with the recent ups and downs of the Korean semiconductor industry.
Chipmakers have experienced cycles of growth, boom, stagnation and recession. In 1994, the domestic chip industry really started to take off, the year when the World Cup was held in the U.S.
Korean semiconductor makers had suffered their worst slump ever just a year before the 1994 World Cup finals.
During years the World Cup was held, 1994 World Cup U.S.A. and the 1998 World Cup France, the semiconductor industry was moving out of recession and entering into growth. For the two years following the World Cup, the industry went into a full-scale growth.
For Samsung Electronics Co. (SEC), chip sales which stood at a mere $4 billion in 1994, soared to $7.5 billion in 1995 and to $5.5 billion in 1996, and enjoyed the bull market.
However, sales plummeted to $4.6 billion in 1997, and hit rock bottom with $4 billion in 1998. But two years after the French World Cup, SEC posted sales of $6.1 billion in 1999 and the record high $8.5 billion in 2000. Last year, it had to once again experience bitter slump with sales plummeting to $4.6 billion.
However, despite the rosy expectations, the recovery of dynamic random access memory (DRAM) prices is staggering and chipmakers are anxious about the possibility that it may fail to escape from the prolonged slump.
Nevertheless, if the business cycle follows the circulation trend, this year's ``slow growth' is rather an auspicious premonition that the chip industry is about to progress into the era of growth and boom.
Moreover, there isn't great dissension among experts on the favorable prospects for the chip industry in the next two years.
"The global memory chip market fell from $54.8 billion in 2000 to $26.8 billion last year, and the market is not expected to enjoy boom this year with sales topping $37.5 billion. The full effects of growth and boom will take place in 2003 or 2004," said a SEC official.
"Thanks to the impending PC change cycle in the corporate sector, on top of the IT industry's entering the third-generation era and increased demand for digital TVs, the semiconductor industry will enjoy an unprecedented boom next year," said the official.
Analysts regard the World Cup Cycle as similar to the "Silicon Cycle" that became popular during the 1980s that had four-year circulation cycle of boom and bust as well.
Copyright 2002. All Rights Reserved.
Financial Times Information Limited - Asia Africa Intelligence Wire
===== Kevin Dean Buffalo, NY ICQ: 8616001 AIM: KDean75206 Buffalo Activist Network http://www.buffaloactivist.net http://www.yaysoft.com
__________________________________________________ Do You Yahoo!? Yahoo! - Official partner of 2002 FIFA World Cup http://fifaworldcup.yahoo.com