November 17, 2005 – The Semiconductor Industry Association (SIA) today 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 microchips 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 7.9% 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. “Advances in microchip technology are enabling a wide array of new products that have captured the imagination of consumers.
“Cell phones are rapidly evolving into multi-purpose personal information and entertainment devices. Pocket-sized MP3 players are incorporating video and gaming functions. The conversion from analog to digital television is accelerating and will gain momentum over the next several years, especially now that Congress appears ready to set a date certain for the US transition to digital broadcasting,” Scalise continued
“Consumers are now driving most of the advances in personal computers, which have become the hub of home technology. Fast-growing consumer markets are expanding demand for leading-edge products for digital signal processing, flash memory, and power management,” Scalise concluded.
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.
Key Semiconductor Product Categories
Discrete Components: The discrete components market was $15.8 billion in 2004. This market is projected to decline by 2.6% to $15.4 billion in 2005; to increase by 3.7% to $15.9 billion in 2006; to grow by 8.9% to $17.3 billion in 2007; and to grow by 8.7% to $18.9 billion in 2008.
Optoelectronics: The optoelectronics market was $13.7 billion in 2004. This market is projected to grow by 9% to $15.0 billion in 2005; to grow by 9.6% to $16.4 billion in 2006; to grow by 10.7% to $18.2 billion in 2007; and to grow by 15.3% to $20.9 billion in 2008.
Analog: The analog market was $31.4 billion in 2004. This market is projected to grow by 1.1% to $31.7 billion in 2005; to grow by 11.9% to $35.5 billion in 2006; to grow by 13.0% to $40.1 billion in 2007; and to grow by 16.4% to $46.7 billion in 2008.
MOS Logic: The MOS logic market was $49.4 billion in 2004. This market is projected to grow by 16.3% in 2005 to $57.6 billion; to grow by 8.4% to $62.4 billion in 2006; to grow by 11.5% to $69.6 billion in 2007; and to grow by 14.5% to $79.7 billion in 2008.
Microprocessors: The microprocessor market was $30.5 billion in 2004. This market is projected to grow by 16.3% to $35.5 billion in 2005; to grow by 11.7% to $39.6 billion in 2006; to grow by 7.6% to $42.6 billion in 2007; and to grow by 8.3% to $46.1 billion in 2008.
Microcontrollers: The microcontroller market was $12.5 billion in 2004. This market is projected to decline by 3.4% to $12.0 billion in 2005; to grow by 6.3% to $12.8 billion in 2006; to grow by 9.5% to $14.0 billion in 2007; and to grow by 11.6% to $15.6 billion in 2008.
Digital Signal Processors: The DSP market was $7.8 billion in 2004. This market is projected to be flat at $7.8 billion in 2005; to grow by 17.2% to $9.1 billion in 2006; to grow by 19.3% to $10.9 billion in 2007; and to grow by 20.2% to $13.1 billion in 2008.
DRAM: The DRAM market was $26.8 billion in 2004. This market is projected to decline by 4.8% to $25.6 billion in 2005; to decline by 10.1% to $23 billion in 2006; to grow by 13.1% to $26.0 billion in 2007; and to grow by 20.0% to $31.2 billion in 2008.
Flash: The flash memory market was $15.6 billion in 2004. This market is projected to grow by 16.1% to $18.1 billion in 2005; to grow by 15.9% to $21.0 billion in 2006; to grow by 4.7% to $22.0 billion in 2007; and to grow by 13.7% to $25.0 billion in 2008