SIA hikes 2006 forecast, smoothes outlook for 2007-2008

June 12, 2006 – Citing stronger than expected growth in several key end-markets — notably cell phones — the Semiconductor Industry Association (SIA) has brightened its semiannual forecast for the semiconductor industry, following a similar recent upgrade from the World Semiconductor Trade Statistics group (WSTS).

The SIA now says this year’s chip sales will be approximately $249.60 billion, a 9.8% increase from 2005, and better than the group’s 7.9% forecast issued in November. The group is generally holding to its longer-term forecast, which calls for 11% growth in 2007 to about $277 billion, followed by 12% growth in 2008 to $310 billion, and then a slowdown of 4% growth in 2009 to about $323 billion. Overall, during the 2006-2009 period, the SIA projects an average compound annual growth rate (CAGR) of 9.2% — a “very remarkable” achievement for an industry this size, stated SIA president George Scalise.

Consumer demand for electronic devices continues to be largely unfazed by energy prices that continue to creep up (as is now holding at ~$3.00/gallon), he noted. Cell phones, particularly 3G devices, are the fastest growing end-user segment, now the No.2 chip-consumption market behind PCs. Approximately one billion cell phones will sold worldwide this year, each containing about $41 worth of semiconductor content, he noted. Other major growth drivers showing double-digit growth include PCs, digital cameras, digital TVs, and MP3 players.

The SIA’s forecast shows flash memory and DSPs with the best growth this year (20% and 18.5%, respectively), followed by optoelectronics at 11%. Analog products will see strong demand this year (17% growth, to $37.4 billion) due to wireless communications and industrial and medical equipment applications. Top CAGR through 2009 belongs to DSPs (nearly 17%), followed by flash (13%) and optoelectronics. The biggest total growth from 2006-2009 will occur in DSPs (57%), flash memory (39%), and MOS logic and optoelectronics (33% each).


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