Chip sales to surpass $300 billion in 2008

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The Semiconductor Industry Association has released its annual forecast of global semiconductor sales, projecting a compound annual growth rate of nearly 10% for the forecast period, 2005 through 2008.

The

Semiconductor Industry Association

(SIA) has released its annual forecast of global semiconductor sales, projecting a compound annual growth rate of nearly 10% for the forecast period, 2005 through 2008.

The new forecast projects that worldwide sales of chips will reach $309 billion in 2008 – an increase of 45% from the $213 billion record level of 2004.

The forecast calls for 2005 sales to increase by 6.8% to $227.6 billion, followed by increases of 7. % to $245.5 billion in 2006, 10.5% to $271.3 billion in 2007, and 13.9% to $309.2 billion in 2008.

“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,” said SIA President George Scalise.

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

The 2006 forecast projects that the microprocessor market will grow slightly faster than the PC market in 2006. Growth will be driven by a growing proportion of notebook computers, which use processors that have higher average selling prices than those used in desktop systems.

The 2006 forecast projects growth of 15.9% for flash memory, driven largely by strong growth (23.5%) in NAND flash, which is used in products such as MP3 players and digital cameras. NOR flash is growing more slowly (6.1%) as cell phone manufacturers are using other types of memory devices, such as DRAMs and NAND flash.

Digital signal processors (DSP) are projected to be the fastest-growing major segment of the semiconductor market with 17.2% growth in 2006. Strong growth in the cell phone market, the transition to 3G (third-generation) cell phones, and new uses for DSP chips in consumer products such as high-definition camcorders are the major drivers of increased demand.

The forecast projects a 10.1% decline in sales of DRAM devices. The SIA noted that the projected decline reflects a relatively mild cyclical decline.