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World chip sales may grow 30% this year

Revenues up 22.6% at least, says Gartner

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The chip industry will grow 22.6 per cent this year, market watcher Gartner has forecast. It admitted that the figure, derived from preliminary data, was "deliberately conservative", but it said that under the right conditions growth could "exceed 30 per cent".

That puts the year's global revenue at between $217bn and at least $230bn.

At this stage, the company can't predict how high demand will be. While the supply side figures are good - Gartner points to fab utilisation rates of 95 per cent or more and improving capital expenditure - all of which indicated "strong growth", it admitted that "some doubts" remain as to the strength of demand.

"There is a concern whether consumers will continue to spend on electronics goods while businesses are still being cautious about investing in IT," the researcher said.

Then again, "price stability and lengthening lead times are already impacting some device markets, such as memories", it continued.

The upshot if such a trend spreads across the industry: "Revenue growth could easily exceed 30 per cent."

Growth is expected to slow in 2005, but that will still be a record year for revenue, Gartner said, with sales reaching $24.58bn.

"Increased capital spending in 2004 inevitably will mean increased manufacturing capacity in 2005, which will lead to an easing of supply constraints, shorter lead times and softer pricing," it said. "By 2006, over-capacity will drive device pricing lower, resulting in a mild revenue decline of 2.3 per cent [to $240.2bn]."

Revenue will rise again in 2007, up 10.5 per cent to a record $265.3bn, followed by 10.7 per cent growth in 2008 yielding annual sales of $293.8bn. Overall, that forecast means a compound annual growth rate of 10.6 per cent over the next five years, Gartner said. ®

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