Semiconductor industry expects accelerating growth through 2008

San Jose (CA) - The Semiconductor Industry Association (SIA) today provided an updated business outlook for 2006 and a general sales estimate for the coming three years. Overall, the organization does not expect a cyclical decline to arrive in the near future and believes that the market will grow by an average of almost 10 percent every year - and break the $300 billion barrier in 2008.

The optimistic forecast comes after rather cautious statements of sales growth earlier this year. As it turns out, a strong semiconductor demand in the segments of notebook computers, cellphones and consumer electronics is more than enough to offset projected sales declines for DRAM memory, microcontrollers and discrete components.

The updated forecast puts 2005 sales at $227.6 billion, which is a 6.8 percent over the $213 billion achieved in 2004. 2006 sales are believed to hit $245.5 billion (+7.9 percent), $271.3 billion (+10.5 percent) in 2007 and $309.2 billion (+13.9 percent) in 2008.

According to SIA President George Scalise, IT will still account for the lion's share of the market, but the focus of semiconductor manufacturing has begun to shift. "While Information Technology products will continue to be the largest market sectors for semiconductors, consumer products will be the major growth-drivers in the years ahead," he said.

"Cell phones are rapidly evolving into multi-purpose personal information and entertainment devices. Pocket-sized MP3 players are incorporating video and gaming functions. The conversion from analog to digital television is accelerating and will gain momentum over the next several years, especially now that Congress appears ready to set a date certain for the US transition to digital broadcasting," Scalise said.

The SIA believes that the fastest-growing major end-markets in 2006 will be personal computers with a forecasted unit growth of 10 percent, cellular telephones with 13 percent, digital cameras with 9 percent, digital televisions with 52 percent and MP3 players with 52 percent.

According to the organization, the Americas region is expected to surpass Europe in sales volume with revenues climbing from $39.1 billion in 2004 to $40.2 billion in 2005. Europe revenues are expected to climb slightly from $39.4 billion to $39.5 billion in 2005. Japan sales will stay ahead of the Americas but drop from $45.8 billion to $44.6 billion this year, the SIA said.

Asia-Pacific remains the driver of the semiconductor industry, with revenue growth outpacing all other mature regions. Sales are projected to grow by 16.4 percent in 2005 to $103.3 billion this year and $150.4 billion in 2008 - or just about half of global semiconductor revenues.