Sat, Sep 11, 2004 - Page 10 News List

Growth in chip sales may slow in second half

MATURE MARKET Demand for cellphones and notebook PCs is expected to cool down, resulting in slower growth in semiconductor sales

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Growth in global semiconductor sales may slow in the second half of the year on sliding prices, according to market researcher iSuppli Corp.

Gains will slow to 20 percent from a 31.4 percent rise in the first half of this year, compared with the year-earlier periods, iSuppli said in an e-mailed report.

Chip sales next year will increase by 9.6 percent instead of the 11.8 percent expected earlier, the researcher said, adding that growth in 2006 will drop to 2 percent. Demand for mobile phones and notebook PCs, which have helped boost semiconductor sales, will slump in the next two years, according to iSuppli.

"The economy doesn't seem that strong," said Mark Herskovitz, who counts shares in chipmakers such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) among the US$2.2 billion he manages for the Dreyfus Premier Technology Growth Fund in New York. "Personal computers and telecommunications are pretty mature markets."

Mobile-phone shipment growth will decline to 5 percent next year, from 18 percent this year and 30 percent last year, iSuppli said. Growth in shipments of notebook personal computers will drop to 10 percent next year, half of the researcher's forecast for this year.

"With demand slackening, price erosion will emerge in late 2004 and will become a major factor in depressing worldwide semiconductor industry revenue growth in 2005," iSuppli analyst Gary Grandbois said. "Throughout early 2004, semiconductor prices held firm as supply and demand came into balance."

The iSuppli forecast comes after Gartner Inc analyst Philip Koh said on Tuesday that worldwide semiconductor sales may peak this year and fall for the first time in five years in 2006 amid concerns of an oversupply in computer chips.

"We are going to see a peak in 2004 from the semiconductor perspective," Koh said at a technology conference in Singapore. "With the oversupply situation coming in 2005, there's a possibility of a decline in the average selling prices of the devices."

TSMC, the world's largest supplier of made-to-order chips, said it received its first order from a customer in China for advanced chips made with 0.13 micron technology to be used in telecommunications products.

One of the chipmaker's customers in China has designed chips for the so-called TD-SCDMA mobile-phone standard, developed locally for new handsets that can link to the Internet at higher speeds, TSMC spokesman Tzeng Jinnhaw (曾晉皓) said, responding to a Chinese-language business daily report.

TSMC has requested permission from the government to ease rules to let it make chips with 0.13 micron technology in China.

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