Global chip sales to reach US$309 billion in 2008

Global semiconductor sales will rise to $309 billion in 2008, the SIA said, after a stronger than expected $227.6 billion this year.

The global semiconductor industry is set to enjoy three years of stable sales growth to reach US$309 billion by the end of 2008, the Semiconductor Industry Association (SIA) said Wednesday.

The group, a U.S. based industry association for chip makers, also revised up its 2005 sales forecast to 6.8 percent year-on-year sales growth to US$227.6 billion, up from an earlier forecast calling for just 6 percent growth this year. Last year, chip sales reached a record high US$213 billion.

The bullish forecasts indicate the group sees steady technology industry growth in coming years, since semiconductors power the world's digital devices. Consumer products such as MP3 players, multipurpose mobile phones and digital entertainment devices for the home will remain the major growth drivers for chip sales over the next few years, but information technology equipment will continue to be the largest end market, the SIA said.

The group said major end markets such as PCs will likely grow by 10 percent next year, with mobile phone sales increasing 13 percent. But consumer devices such as digital televisions and MP3 players will outpace older products, with forecast growth of 52 percent in each category, according to the SIA.

The Asia-Pacific region will lead chip industry sales growth in coming years, with 16.4 percent year-on-year growth to US$103.3 billion this year followed by 11.4 percent growth to US$115.1 billion next year and US$150.4 billion in 2008, the SIA predicted.

Japan will be the biggest laggard this year, with a projected 2.6 percent drop in chip sales to US$44.6 billion, followed by Europe, with a slow 0.1 percent increase in chip sales to US$39.5 billion, according to SIA figures. The group forecast Japan will bounce back next year with 5.2 percent growth, while Europe will gain 4.9 percent.

Digital signal processors, or DSPs, which are used in communications devices, are projected to post the sharpest growth among chip segments next year due to strong cell phone sales, the transition to 3G (third generation) mobile pones and new uses for DSP chips in consumer products like high-definition camcorders, according to the SIA. The group forecasts DSP sales will rise 17.2 percent to US$9.1 billion next year, after remaining flat this year.

Flash memory will also remain a hot item next year led by strong growth in NAND flash, which is used mainly for its storage capacity in MP3 players, digital cameras and other devices. The other main kind of flash, the NOR used to access and run software in mobile phones, is growing more slowly, according to the SIA. Next year, flash memory sales will rise 15.9 percent to US$21 billion, after a strong 2005 when flash grew 16.1 percent, the SIA said. NAND sales will grow 23.5 percent next year, followed NOR's slower 6.1 percent increase.

DRAM (dynamic RAM) memory chips will suffer the most next year, with a drop of 10.1 percent in global sales to US$23 billion, after a 4.8 percent decline this year to US$25.6 billion, according to the SIA.

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