Semi-Good News for Semiconductor Market

The market got a boost from the Semiconductor Industry Association (SIA) with a forecast that worldwide sales are expected to increase by 1.8 percent to $141 billion in 2002, by 19.8 percent to $169 billion in 2003, and by 21.7 percent to $206 billion in 2004. However, SIA also predicts the market to then remain flat at $206 billion in 2005, and some segments may experience a decline before any significant growth is seen.

The numbers are already starting to go up as the association measured global semiconductor [define] revenues at $36.9 billion in 2002’s third quarter, up from $34.1 billion the previous quarter and a 21 percent increase from the same period in 2001.

“The recovery of the semiconductor industry has picked up breadth and strength as the year has progressed,” stated SIA President George Scalise.

SIA expects wireless to be the strongest market as consumers upgrade to 2.5/3G technologies offering video messaging and wireless Internet access, along with significant growth for some semiconductor products. “We achieved solid 8.2 percent revenue growth in the September quarter, following 5.6 percent sequential growth in the first quarter of 2002 and 5.8 percent growth in the year’s second quarter, with momentum across major product sectors, including wireless, digital consumer products, PCs and automotive,” notes Scalise.

Semiconductor Product Predictions
Digital signal processors (DSPs) [define], which can be found in wired and wireless communications applications, is forecast to increase 15 percent in sales to $4.9 billion in 2002, 33 percent in 2003 to $6.5 billion, 29 percent to $8.4 billion in 2004, and 12 percent to $9.4 billion in 2005.

Application specific standard products (ASSP) include consumer, computer and peripheral, communications, automotive, and industrial and other markets. This segment declined 27 percent in 2001 but projections show growth of 5.7 percent to 15 billion in 2002, and then an increase of 18 percent to $17 billion in 2003 and 21 percent to $21 billion in 2004. Growth slows to 5.4 percent in 2005 to $22 billion in sales.

Flash products can be found in communications and digital photography applications. In 2002, the SIA expects this market to remain flat at less than 1 percent to $7.7 billion. Growth of 39 percent to $11 billion will occur in 2003, followed by 28 percent to $14 billion in 2004. In 2005, however, Flash is expected to decline 9.1 percent to $12 billion in sales.

There was also a 15 percent increase during the third quarter in optoelectronics [define] – the market that includes laser devices, image sensors, and products that are frequently used in communication applications. Optoelectronics is expected to decline 7 percent to $7 billion in sales in 2002, but then grow 18 percent to $8.1 billion in 2003, 17 percent to $9.5 billion in 2004, and 10 percent to $10 billion in 2005.

The SIA measured almost 5 percent revenue growth in DRAMs [define] and a similar spike in microprocessors. The SIA expects the DRAM market to grow 35 percent to $15 billion in 2002, 35 percent to $20 billion in 2003, and 43 percent to $29 billion in 2004, followed by a decrease of 29 percent to $21 billion in sales in 2005. Microprocessors will eke out 1.9 percent growth to $24 billion in 2002, and then grow 12 percent to $27 billion in 2003, 14 percent to $30 billion in 2004, and 4.6 percent to $32 billion in 2005.

Global Forecast
Chip [define] sales rose 8 percent in the third quarter in the Asia-Pacific market. The world’s largest market for chip consumption will continue to experience the strongest growth with sales increasing 30 percent to $52 billion in 2002, followed by 24 percent to $64 billion in 2003, and 25 percent to $80 billion in 2004. 2005 shows a slowdown with only 3 percent growth to $83 billion.

Chip sales increased 15 percent in Japan during the third quarter of 2002 but the year will end with an overall decrease of 7.5 percent to $31 billion. It will then increase 22 percent to $37 billion in 2003, 18 percent to $44 billion in 2004, and then decrease 1.3 percent in 2005 to $43 billion.

In Europe, chip sales rose 7.9 percent for 3Q 2002. This region will decline 9 percent in 2002 to $27 billion, and then grow 18 percent to $32 billion in 2003, 19 percent to $39 billion in 2004, and decrease 1 percent to $38 billion in 2005.

Sales in the Americas were up 1.9 percent in the third quarter, but will decline 12 percent to $31 billion in 2002. It will even out with 14 percent growth to $36 billion in 2003, 22 percent growth to $43 billion in 2004, and then decline 4.6 percent in 2005 to $41 billion.