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Researcher revises 2003 chip sales growth downward

But only because it underestimated last year's sales

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Despite underestimating the size of the world chip market last year, market researcher In-Stat/MDR is maintaining its forecast for 2003.

Last October, the company said it expected the chip market to be worth $139.04 billion, and that 2003 would see 18.1 per cent growth to $164.2 billion.

In the event, 2002's chip sales totalled $140.7 billion, 1.2 per cent higher than In-Stat/MDR's prediction. Has it revised its forecast for 2003, in the light of this increase? No. It is still predicting sales of $164.2 billion, but it has trimmed its growth forecast to meet that total.

Of course, one-and-a-bit percentage points is probably within the company's error margin, which is why it doesn't feel the need to raise its sales figure. But a similar percentage discrepancy between prediction and actual total would leave 2003 chip sales at just $166.17 billion - nearly $2 billion more than expected.

That said, it could go either way, leaving the industry down on expectations. First quarter sales were up just 13 per cent, year-on-year, according to the Semiconductor Industry Association, increasing the need for higher growth the latter part of the year to bring the total growth figure up to In-Stat/MDR's 16.7 per cent. The SIA is forecasting overall annual growth of between ten and 15 per cent, knocked down from an initial 19 per cent chiefly because of the effect of the SARS virus.

Looking ahead, In-Stat/MDR reckons growth with reach 25 per cent in 2004. Growth will slow during 2005, however, falling to 13.5 per cent, and the market will once again go into decline in 2006, shrinking 10.6 per cent. That contraction will be driven by overcapacity as supply outstrips demand through 2005. Next year, demand will lead supply. ®

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