Chip group sees recovery starting this quarter

The global semiconductor industry is set to begin recovering this quarter, driven by sales of PCs, mobile phones and other consumer products, the Semiconductor Industry Association (SIA) said in its annual forecast, released Wednesday.

The industry will recover from both the excess inventory that haunted it last year and this year's weak demand, beginning this quarter, the SIA said. Slow growth will occur throughout 2002, and then the market will return to a normal growth pattern, increasing by about 21 percent in both 2003 and 2004, the SIA said.

While global sales of semiconductors will decrease 31 percent this year, dropping to US$141 billion, according to SIA projections, the market will grow by 6 percent in 2002 and will be a $218 billion market worldwide in 2004.

Geographically, the Americas are a $36 billion market this year and will grow by 4 percent next year, and 21 percent in both 2003 and 2004, becoming a $56 billion market in 2004. Europe, which is currently a $30 billion market, will grow 1 percent next year and 20 percent in both 2003 and 2004, reaching the $44 billion point in 2004.

Japan and the Asia-Pacific market will see similar growth, with the Japanese semiconductor market growing from $35 billion this year into a $52 billion market by 2004, and the Asia-Pacific market growing from $39 billion this year to $67 billion in 2004, the SIA said.

The largest revenue-generating category will be the MOS (metal-oxide semiconductor) market, driven primarily by communications and ASIC (application-specific integrated circuit) products, including display drivers for flat-panel displays, the SIA said. MOS products make up a $25 billion market this year but will grow into a $38 billion market by 2004.

DRAM (Dynamic RAM), DSPs (digital signal processors) and flash memory also are expected to show strong growth, with DRAM growing from a $12 billion market this year to a $29 billion market in 2004, the SIA said. The DSP market is expected to double in the same period, growing from a $4 billion market this year to an $8 billion market in 2004.

The flash memory market, driven largely by sales of data-capable high-speed mobile phones and digital cameras, will grow from a $7.8 billion market this year to a $12 billion market in 2004, the SIA said.

Digital cameras have already proved their importance in the market for flash memory chips.

"In Japan, people bought more digital cameras in the first half of 2001 than they did 35-millimeter cameras," Rich Templeton, Texas Instruments Inc.'s chief operating officer, said during an audio Webcast following the announcement of the forecast.

One major camera manufacturer recently announced that it already takes in more revenue from digital cameras than from traditional cameras, SIA President George Scalise said during the Webcast.

The direct effects on the industry of the Sept. 11 terrorist attacks, such as transportation difficulties caused by the grounding of commercial flights, are almost completely in the past, Scalise said.

"It's our view that for the most part, by the time we got to Oct. 1, that was all behind us," he said.

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