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Multi-Tasking Boosts Chipmakers' Sales - InternetNews.
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Multi-Tasking Boosts Chipmakers' Sales

The high tech turnaround is expected to continue well into 2004 as long as consumers keep asking for devices that can do many things at the same time, one industry trade group said Monday.

The latest report published by the Semiconductor Industry Association (SIA) suggests worldwide sales of semiconductors jumped to $166.4 billion in 2003. That is up 18.3 percent from the $140.8 billion manufacturers and vendors managed to eke out in revenue for 2002.

"The industry's broad, upward momentum across all product sectors and geographic markets is driving us toward another year of strong, double-digit growth, which is now expected to exceed 19 percent in 2004," SIA president George Scalise said in a statement. "The wireless sector continues to spearhead growth, but PC shipments also recovered in 2003 to an 11 percent unit volume increase. We are experiencing a virtual revolution in global consumer markets as consumers adopt new technology and multi-functional smart devices such as camera phones, PDA's and DVD's."

The SIA's report is based on a three-year moving average of sales activity. The numbers are tabulated by the World Semiconductor Trade Statistics (WSTS) organization, which represents some 66 semiconductor companies.

The trade group's final numbers for 2003 come as a pleasant surprise to a year that didn't bode well for sales. Conflict in Iraq and the SARs epidemic in Asia crippled chip sales early on. Both factors gave industry watchers pause as the SIA had predicted double-digit growth for this past year.

Luckily for chipmakers, the industry's second half 2003 performance was one of the strongest on record, supported by a pent-up demand. The SIA said that helped spark a U.S. Gross Domestic Product growth of 8.2 percent in the third quarter and 4 percent in the fourth quarter.

Another indication of good things to come, according to SIA principal analyst Doug Andre, is that the excess inventory problems of 2003 seem to have worked themselves out.

"We've always thought that the inventory at the end of the year had been too low and that has actually led to some backorders," Andrey said in a briefing with reporters. "We think that the first quarter will be good overall because we have no excess inventory to burn off in the first quarter."

PC sales were a major contributor to the inventory problem, the report said. For example, growth in the year's fourth quarter excelled with DRAM revenue up 10.6 percent, and microprocessors up 7.9 percent in the December quarter over the September quarter. Such was evident by the impressive quarterly and year-end financial statements from companies like Intel and AMD.

The SIA said the global wireless market was also very strong, growing 16 percent in 2003, double initial forecasts. In 2003's final quarter, year-over-year volumes were up 20 percent, with Digital Signal Processors rising 11.6 percent in the quarter. The wireline communications market also turned in a positive performance in 2003's final quarter for the first time since 2000, with Programmable Logic Devices up 32.5 percent.

Flash memory continued its rise in popularity, up a hefty 29.3 percent. The trade group said Flash memory was selling so well, in fact, that it is starting to rival traditional DRAM chip sales. Andrey said the SIA's report was not specific on which style of Flash memory had the highest growth, but did say in general "NAND", which is used in consumer devices like digital cameras, cell phones, USB flash drives and MP3 players, is in higher demand than its cousin "NOR".

In more targeted electronics markets, the SIA's report said Optoelectronics rose 11.6 percent and Application Specific Products for consumer were up 21 percent. For example, the SIA said semiconductors are increasingly pervasive in automobiles, with the automotive market now 8.1 percent of end demand for semiconductors and dedicated chips up 10.3 percent in the fourth quarter of 2003.

Regionally, every part of the globe saw double-digit growth with sales in Europe up 14.5 percent sequentially, Japan up 10.5 percent in the quarter, sales in the Americas up 10.2 percent, and Asia Pacific revenue up 10.0 percent.