RealTime IT News

Chip Sales Expected to Finish Strong in '04

Despite a major slowdown in sales in the latter half of 2004, the chip industry is expected to reap a 23 percent increase on sales of $218 billion, according to early findings from Gartner.

Learning from the market crash of 2001, when a surplus of chips sat unsold and unused in boxes, vendors like Intel, Samsung and Texas Instruments have scaled back their semiconductor output.

This led directly to the decline in chip sales in late 2004 as vendors exercised caution, Gartner analyst Gerald Van Hoy said in a statement.

"In a break from the past, semiconductor vendors have reacted quickly and decisively by throttling back output. They are determined to avoid the type of market crash that occurred in 2001 following a huge inventory buildup," Van Hoy said.

With revenues of $30.5 billion, chip king Intel remained the top vendor with 13.7 percent of the market, buoyed by its compute microprocessor sales. The chipmaker competes fiercely in the high-end server chip market with AMD .

Last week, Intel took over the manufacturing of the Itanium server processor, acquiring the remaining 100 members of HP's Itanium chip design team in Ft. Collins, Colo.

No. 2 Samsung Electronics increased revenue by 49 percent, from $6 billion to $15.6 billion on the strength of its dynamic random-access memory (DRAM) and NAND chips for Flash memory. The Korean vendor shows no signs of slowing down, pledging to pump $843 million into its Flash memory plant going forward.

Samsung is also enjoying strong sales of its liquid crystal displays, as well as chips for MP3 players, digital cameras and cell phones.

Texas Instruments captured the third slot, edging out Renesas Technology, which held the position in 2003. Gartner said TI's wireless communications chips, in particular, sold well.

With $8.9 billion in revenue, Infineon Technologies remained the largest chip manufacturer in Europe and fourth on the worldwide list, moving ahead of Renesas.

As it is doing in other IT markets, the Asia-Pacific market grew the most with a 34.6 percent increase in revenue for 2004. Europe, Middle East and Africa followed with 19.8 percent, while the Americas boasted an increase of 16 percent.