November 16, 2006 – The Semiconductor Industry Association (SIA) has slightly tweaked its outlook for chip sales for the next several years, seeing 9.4-10.6% growth through 2008, as the industry becomes even more tightly tied to consumer electronics demand.
The new SIA numbers are slightly less than those projected in June: $248.8 billion in chip sales in 2006, a 9.4% increase from 2005, followed by $273.8 billion in 2007 (10% growth vs. 11% in June) and $303.4 billion in 2008 (10.8% vs. 12% earlier). The SIA also raised its outlook for 2009 chip sales, to 5.8% annual growth vs. 4%, to about $321 billion.
SIA president George Scalise pointed to a broad range of market-driving factors, most of which stem from consumer device demand. Consumer electronics including cell phones, digital cameras and TVs, and MP3 players make up roughly 40% of chip sales, he pointed out, and adding in other end markets such as automobiles and PC pushes consumers to more than half of all semiconductor demand.
Cell phones alone are expected to enjoy 20% growth in unit sales this year, to exceed 1 billion units — with an average semiconductor content of $41/unit, encompassing high-performance flash memory, DSP circuits, RG chips, and image-sensing devices, Scalise pointed out. In China, seen as the hottest growth market for cell phones, nearly 90% of all GSM handsets have color screens, 60% have built-in cameras, and about half have MP3 player capabilities, he noted.
Other consumer segments are also witnessing impressive growth, including MP3 players (35%) and digital TVs (56%), followed by digital cameras (11%) and even PCs (10% unit growth).
DRAM sales are projected to see the best compound annual growth rate from 2006-2009 at 14%, with particular strength over the next few quarters as PC makers prepare for the Windows Vista operating system. NAND flash sales are projected to grow 11% CAGR, driven by use as replacements for hard drives in MP3 players and portable storage media such as digital photography. Digital signal processors (DSPs, 13%) and analog products (11%) are also expected to see double-digit CAGR through 2009, followed closely by MOS logic devices, the biggest segment (8% CAGR).
Breaking down sales projections by individual product category, the SIA has hiked its annual growth and CAGR outlooks for a number of smaller devices from its June forecast, but those are more than offset by a downward revision in the largest categories of microprocessors and MOS logic devices. Discretes (8.8% annual growth in 2006, vs. 4.9% in June forecast), optoelectronics (12.3% vs. 11%),
Major semiconductor product categories, 2006-2009 sales
(US $B)
Category………………..2006 (vs. 2005)……….2009……….CAGR
Discretes…………………….16.6 (8.8%)………….19.9……….6.9
Optoelectronic…………….16.7 (12.3%)……….22.1……….10.4
Analog…………………………37.3 (16.8%)……….48.6……….11.1
Microprocessor……………33.2 (-5%)……………41.9……….4.7
Microcontroller…………….12.5 (3.5%)………….15.3……….6.1
DSP……………………………….8.6 (12.8%)………..12.3……….12.7
MOS logic…………………….60.3 (4.6%)……………78.8……….8.1
DRAM…………………………..33.0 (29%)……………44.2……….14.6
Flash (NAND+NOR)…….20.5 (10.4%)……….25.7……….8.4