Annual chip growth forecast for 2006 revised up

Annual chip growth forecast for 2006 revised up

Worldwide growth in chip revenue could reach 10.1 percent this year, higher than originally expected.

Worldwide growth in chip revenue could be higher than originally expected this year due to strong demand and an increase in the number of chips used in various electronics products, a group said Tuesday.

Global chip revenue in 2006 could rise 10.1 per cent over last year to $US250 billion, according to World Semiconductor Trade Statistics (WSTS), which supplies its data to industry trade groups around the world, including the Semiconductor Industry Association. The figure is higher than its earlier projection of 8 per cent growth, and would also beat the 6.8 per cent increase from last year.

"The WSTS foresees a continuation of the growing demand enhanced by increasing semiconductor content for electronic products such as PCs, digital consumer appliances and mobile communications within a challenging but generally healthy world economy," it said in a statement.

The upward revision could mean higher prices on some products for users since production lines at chip factories around the world are already running close to full capacity. Currently, prices of DRAM memory chips and NAND flash memory are both on the rise. Memory chipmakers have limited their new factory spending in recent years, and diversified into building a variety of new chip products to combat sales volatility in DRAM. Although the goal of chipmakers is always to reduce prices by increasing output, the result of their controlled spending and product diversification has been more stable prices in recent years.

Strong growth this year will be followed by double-digit growth over the next two years as well, WSTS said. Revenue in the global chip industry will accelerate to 11.0 per cent next year and 12.8 per cent in 2008.

Asia-Pacific will be the largest and fastest growing regional market, outpacing global growth with a rise of 12.4 per cent in 2006 and 12.8 per cent the year after. In 2008, chip revenue in the region will rise 15 per cent to $150.7 billion, according to WSTS.

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