Fine forecast for semiconductors

The Semiconductor Industry Association (SIA) yesterday released an updated forecast projecting worldwide sales of semiconductors will grow by 9.8 percent to $249.6 billion in 2006.

The forecast was revised upward from the November forecast projecting an increase of 7.9 percent to $245 billion. The SIA attributed the upward revision to stronger than expected growth in key end markets for semiconductors, most notably cell phones.

The revised forecast also includes more optimistic projections for industry sales from 2006 through 2009.

According to the SIA, the industry will grow by 11.0 percent in 2007, 12.0 percent in 2008, and 4.0 percent in 2009. If the latest forecast materializes, worldwide semiconductor sales will reach $323 billion in 2009. Actual sales for 2005 amounted to $227.5 billion. The new forecast projects an average compound annual growth rate of 9.2 percent from 2005 through 2009.

“Despite sharply higher energy prices, consumer demand for a wide variety of electronic products continues to fuel growth of the semiconductor industry,” said SIA President George Scalise. “Stronger than anticipated end-market demand, mainly in consumer product sectors, caused us to raise our forecast for semiconductor industry growth for 2006.

“The fastest-growing major end-market segment is cellular telephones – especially third-generation (3G) phones. We now believe approximately one billion cell phones will be sold worldwide in 2006. With an average semiconductor content of $41 per unit, this segment is now second only to personal computers in terms of total chip consumption.

“Other major drivers of demand for semiconductors include personal computers, digital cameras, digital television, and MP3 players,” Scalise continued. “Each of these end-markets will grow in double digits this year, and we expect continued growth through the current forecast period.”

Scalise noted that the latest forecast of compound annual growth of 9.2 percent through 2009 reflects the new realities of the worldwide semiconductor industry.

“It is very remarkable for an industry of this size to sustain growth in the range of 8 to 10 percent annually. With both inventory and capacity in balance, conditions are favourable for continued semiconductor industry growth,” Scalise concluded.