Semiconductor revenues to break $300 billion barrier in 2008

Posted by Wolfgang Gruener

San Jose (CA) - The Semiconductor Industry Association (SIA) today released its annual forecast of global semiconductor sales, which expects a healthy growth rate for most microchip segments. As a result of cut-throat competition, revenues in the microprocessor market will be declining this year, the SIA said.

The semiconductor industry has little to worry about over the next few years, if the estimates of the industry organization are right. 2006 sales, which have been stronger than expected at the beginning of this year, will increase about 9.4% over 2005 and reach $248.8 billion, the SIA said. 2007 will follow with a 10% increase to $273.8 billion and 2008 with 10.8% to $303.4 billion. A decline in growth is expected for 2009, which the SIA believes will grow sales by 5.8% to about $321 billion.

In aggregate, the four-year forecast represents 41% of revenue growth over 2005 sales of $227.5 million.

"Consumer purchases of a broad range of electronic products continue to grow as the leading driver of demand for semiconductors," said SIA president George Scalise. "Traditional consumer electronics products, such as digital cameras, digital televisions, and MP3 player players now account for nearly 20 percent of all semiconductor consumption."

Unit sales of cellphones are expected to increase by more than 20% in 2006 to more than 1 billion units. With an average semiconductor content of $41 per unit, the cellphone market is now the second-largest consumer of semiconductors, after personal computers. Other rapidly growing product segments include digital cameras with projected 11% unit growth, MP3 players with 35% unit growth, digital televisions with 56% unit growth, and personal computers with projected 10% unit growth.

DRAM sales are projected to be the fastest-growing segment with an average annual growth rate of more than 14% between 2006 and 2009. Microprocessors are the only semiconductor segment whose sales are estimated to decrease this year: The hard fought competition for market shares between AMD and Intel is expected to result in a 5% decrease in revenues to $33.2 billion in 2006 and grow on average of 4.9% over the next four years to $41.9 billion in 2009.