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China leads region in semiconductor boom this year

The Asia-Pacific semiconductor industry will grow at a world-fastest rate of 27.4 percent to reach US$90.8 billion this year, fuelled by demand in China, research house Gartner Inc said yesterday.

Over the next four years, the industry is expected to average 14.3 percent annual growth to be worth US$138.8 billion, up from US$71.3 billion last year.

"Riding on the positive wave created in 2003, the Asia Pacific semiconductor industry is poised to propel the global semiconductor market to new heights," said Gartner's Singapore-based principal analyst Philip Koh.

Dip forecast for 2007

Year-on-year growth in the region will slow however to about 3.6 percent by 2006, indicating a dip in the cycle, before picking up against to 12.6 percent by 2008.

"The rising demands from the end-user industries are the key driving force," Koh said.

"China, the electronic manufacturing hub of the world, is expected to continue to lead the industry in the region," he said.

In China, which is the third largest semiconductor market, Gartner forecasts demand will grow 33 percent this year to US$39.7 billion and then see an average 18.2 percent in annual growth to reach US$68.6 billion by 2008.

In the region excluding Japan, South Korea is expected remain the next most vibrant market following China, according to Gartner.

Taiwan ranked third

The South Korean market is forecast to reach US$26.5 billion by 2008 with an annual growth rate of 15.3 percent, while Taiwan is expected to be worth US$18 billion in four years with 9 percent growth.

Singapore looks set to be the regional odd man out, posting a compound annual growth rate of just 4.7 percent compared with an Asia-Pacific average of 14.3 percent, Gartner said.

Gartner said the growth rates in the Asia-Pacific region would continue to be faster than any other region in the world, with wireless communications, digital consumer electronics and personal computers remaining the main drivers.

The market researcher said last month that Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other providers of made-to-order chips will boost their collective sales by 41 percent this year and 37 percent next year.

TSMC saw a record monthly high for sales for last month amid strong demand. Revenue rose 29 percent to NT$21.72 billion (US$649.34 million) last month, up sharply from NT$16.81 billion a year ago.

In the first five months of the year, TSMC's revenue reached NT$99.86 billion, up 40 percent from NT$71.40 billion a year earlier.

The global semiconductor industry is expected to see a 30 percent increase in sales this year and the strong growth momentum will carry into next year, TSMC chairman Morris Chang (張忠謀) said earlier this month.

The chip industry will have a healthy growth rate of 10 to 12 percent annually during the decade to 2010, he added.
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