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Chip biz to see ‘lacklustre’ 2003 growth

Researcher gives 2004 the thumbs-up, though

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Semiconductor industry watcher Semico has reiterated its prognosis that the global chip business will see on "lacklustre" growth this year.

However, 2004 is set to become something of a boom time, as growing PC and cellphone sales lift demand for new chips, the researcher added.

Semico bases its forecast in its Inflection Point Indicator (IPI), which models the state of the market and provides an indication of the industry's health six to nine months down the line, the company says.

Back in April, Semico said its IPI had yielded a negative figure from December 2002 through February 2003. That, it said, suggested industry instability through 2003. On the back of its findings, Semico downgraded its 2003 growth forecast from a bullish 17 per cent to just 10.7 per cent.

Two months later, in June, the Semiconductor Industry Association (SIA) downgraded its own 2003 growth forecast from over 19 per cent to 10.1 per cent.

Now, Semico says its June IPI was the lowest positive reading since February, a further indication that growth this year will not be impressive, with a slower-than-expected upswing during the second half of the year. Any sudden upturn in demand will drive the chip industry upwards, but the effects won't really be felt until next year.

Come 2004, and growth is likely to rise to 21-23 per cent above 2003, Semico says, driven by increased enterprise and consumer spending on computers and cellphones.

The improvement will be short-lived alas, with the market dipping once again in 2005, as chip makers find the equipment installed on the back of the previous year's growing sales falls idle. ®

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