Chip industry predicts resurgence on tap for 2004

Chip industry predicts resurgence on tap for 2004

The third-quarter upturn in revenue reported by semiconductor companies over the past few weeks will continue for the rest of the year and into 2004, according to the Semiconductor Industry Association (SIA) and In-Stat/MDR.

The SIA predicted revenue will increase by 15.8 per cent in 2003 to $US163 billion, and by 19.4 per cent in 2004 to $194.6 billion in a press release Wednesday. In a separate release, market research firm In-Stat/MDR said 2003 revenue will grow 16.7 per cent to $164.2 billion, and predicted 2004 revenue will reach $206.8 billion, a 26 per cent increase.

Flash memory, optoelectronics, and digital signal processors (DSPs) will pace the overall market's growth for the remainder of this year and into next year, the SIA said. Shipments of cell phones, which use both flash memory and DSPs, are growing strongly, and that momentum will bring in more revenue to vendors of chips for those products, the trade group said.

Optoelectronics components are used in lasers, sensors, and networking equipment. Revenue from those components will grow 34.7 per cent this year, and 19.2 per cent next year, the SIA said.

Both Intel and Advanced Micro Devices reported sharp increases in revenue when they announced their third-quarter results last month. That trend extends to the rest of the industry, with revenue from microprocessor sales forecast to increase 14.4 per cent to $27.3 billion in 2003, and to grow 18.3 per cent to $32.3 billion in 2004, the SIA said. In 2002, Intel's microprocessor business alone accounted for $22.3 billion in revenue.

This recovery from one of the worst downturns in the history of the industry has been driven by a wider range of semiconductor products, and is therefore less susceptible to slowdowns in any one category, such as PCs, than prior recoveries, In-Stat said.

Chip manufacturers are gearing up for a recovery, pushing fab utilisation rates up to 86 per cent in the second quarter of 2003, and that rate is forecast to reach 90 pe rcent in the near future, In-Stat said. During the worst point of the downturn in the third quarter of 2001, utilization rates fell to 64 per cent, the company said.

Asia-Pacific will continue its position as the fastest-growing region of the world in terms of revenue from semiconductors, the SIA said. The plethora of chip foundries, motherboard manufacturers, and computer assemblers in the region will take in $60.6 billion in 2003, an increase of 18.6 per cent over last year. The region, which excludes Japan, brings in more revenue from semiconductors than any other area of the world, the SIA said.

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