Worldwide sales of semiconductors, after their worst-ever slump last year, are on the rebound this year and will rise a modest 3.1 percent to US$143 billion, a trade group said on Wednesday.
After rising modestly this year, the Semiconductor Industry Association, in its mid-year forecast for the industry, predicts global sales of semiconductors will rise 23.2 percent to US$177 billion next year and 20.9 percent to US$213 billion in 2004. Muted growth of 0.9 percent, to US$215 billion, is expected to follow in 2005, it added.
"So far this year, we have seen a significant decline in excess inventory and manufacturing capacity, and the industry has resumed modest sequential growth, indicating that we are in the initial stages of a recovery," said Dwight Decker, chairman and chief executive of chipmaker Conexant Systems Inc.
Increasing sales of cellular handsets, personal computers and of digital consumer electronics devices during the next 10 quarters will lead the rebound, Decker said.
The chip industry suffered last year as economies slowed, companies cut back on information technology spending, and chip companies overbuilt inventories based on overly optimistic assumptions of growth, particularly in the telecommunications industry.
Rapid growth in the Asia Pacific region will help to fuel growth in the notoriously boom-and-bust industry, which suffered its worst-ever year last year, when global chip sales plunged some 34 percent, twice the previous-worst percentage decline in 1985.
During the next four years, the Asia-Pacific market will become the world's largest in terms of chip sales, followed by the Americas, the SIA said. That region has already been the top revenue generator for Intel Corp, the world's biggest chipmaker, for the last two quarters.
The Asia-Pacific region accounted for 36 percent of Intel's first-quarter revenue of US$6.78 billion. For diversified semiconductor maker National Semiconductor Corp, the region accounted for 32 percent of its fiscal 2001 revenue of US$2.11 billion, up from 30 percent of its fiscal 2000 revenue of US$2.14 billion.
For this year, chip sales in the Americas are expected to drop 4 percent to US$35 billion, fall 2 percent in the European market to US$30 billion, and tumble 14 percent in the troubled Japanese market to US$28 billion. Growth is expected only in the Asia-Pacific market this year, the SIA said, with an estimated 27 percent rise to US$51 billion.
But after this year, the SIA predicted that growth in the Americas, European and Japanese markets will take off, with double-digit percentage growth next year and in 2004.
"Our expectation is that the recovery will gain momentum in the second half of the year and continue with strong growth through 2003 and 2004," Decker said.
"The recovery will be led by strong growth in Asia Pacific, as a result of increases in outsourced contract manufacturing and strong regional consumer demand," he said.
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