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.

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