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SIA halves chip industry growth forecast

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The Semiconductor Industry Association (SIA) yesterday revised its forecast for growth in the world chip market downward to reflect "the new realities of the semiconductor market".

Back in November 2002, the organisation predicted chip sale would increase 19.8 per cent during 2003. Yesterday, when it released its mid-year forecast, it changed that figure to a more modest 10.1 per cent, a reduction of almost half.

To date, the SIA has been sticking to its claim that the industry will experience "double-digit growth" this year. It's new forecast allows the organisation to save face - by a mere fifth of a percentage point.

The move follows a similar forecast revision made by the World Semiconductor Trade Statistics (WSTS) group. Last October, WSTS predicted that the industry would grow by 16.6 per cent during 2003. Now it has cut that forecast to just 11.5 per cent.

Breaking down the SIA's forecast by chip type, the organisation reckons sales of microprocessors will grow 8.1 per cent to $25.8 billion then 11.1 per cent to $28.6 billion in 2004, seven per cent to $30.7 billion in 2005, and four per cent to $31.9 billion in 2006.

The DRAM market is expected to grow 2.9 per cent to $15.7 billion in 2003 and 43 per cent to $22.5 billion in 2004. In 2005, DRAMs are expected to decrease 26.8 per cent to $16.4 billion. In 2006, this market will rebound 29.6 per cent to $21.3 billion in sales. As the SIA notes, this clearly shows the highly cyclical nature of the DRAM business.

Looking ahead for the industry as a whole, the SIA expects the industry to grow by 16.8 per cent next year, followed by 5.8 per cent growth in 2005 and an increase of seven per cent during 2006. By then the industry will be worth $205 billion, up from 2002's sales of $141 billion.

Related Link

The SIA's chip market forecast and breakdown

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