Outlook for semiconductor industry improves

El Segundo (CA) - After forecasts of stagnating or even declining revenues for the semiconductor industry in 2005, analysts now expect visible revenue growth. iSuppli believes chip manufacturers will be able to increase sales by 6.1 percent to more than $240 billion.

When it comes to cyclical downturns there are few segments in the IT industry that are as predictable as semiconductors. Such a downturn, or at least a stagnation, was expected to happen this year. Both analysts as well as the Semiconductor Industry Association (SIA) agreed early this year that the record result of 2004 was unlikely to be repeated in 2005.

In a rather surprising turn, the SIA reported higher than expected sales from January to April, which also led analysts to revise their sales estimated for 2005. iSuppli is the first firm to release a detailed forecast, which puts sales expectations at $241.1 billion, up 6.1 percent form $227.2 billion in 2004.

"Worldwide economic conditions and trends in the global electronics and semiconductor industries continue to reinforce iSuppli's outlook for mid-single-digit growth for worldwide semiconductor revenue in 2005," said Gary Grandbois, principal analyst and head of semiconductor forecasting for iSuppli.

According to Grandbois, 2005 will be a year of "modest growth" and will cause "minimal unpleasantness" for the industry.

While it is a bit early to forecast revenues for the coming years, it is noteworthy that iSuppli does not expect revenues of the semiconductor industry to dip until 2010. According to the research firm, 2006 revenues will top $247 billion, $272 billion in 2007, $304 billion in 2009 and $332 billion in 2009.