Reading its tealeaves and casting its runes, the Semiconductor Industry Association (SIA) Wednesday predicted there will be phenomenal growth in chip sales in the next three years.
Based mostly on memory chip sales, the San Jose, Calif.-based group is projecting 16.8 percent growth for 2004. After that, SIA president George Scalise says worldwide sales of semiconductors should stabilize at 5.8 percent in 2005, and then build again to 7.0 percent in 2006. Overall, Scalise says his group’s stats show a compound annual growth rate of 9.8 percent between 2003 and 2006, making industry sales on track to grow from $141 billion in 2002 to $205 billion in 2006.
“We assume the geopolitical climate is going to be quiet, that the SARS issue will be resolved and corporate investment in PCs will return,” Scalise said in a phone briefing. “What that creates is a more stable environment going forward than in the past.”
Scalise says the jump in 2004 growth going to be a combination of a strong increase in memory, including a 43 percent jump in DRAM
“There comes a point where the machines that are sitting out there will be replaced because they lack two things, the advanced operating systems and the processing power to run them,” Scalise said. “I think we’ve been conservative in the past when we talked about 3-year upgrade cycles. Now we are seeing an extended upgrade cycle of 3 to 4 years.”
On the downside, 2003 will be lucky if it can keep its double-digit growth prediction of last year. Originally, estimated to hit 19 percent, Scalise revised his estimates of worldwide sales of semiconductors to increase 10.1 percent by the end of the year.
“In the beginning of the year it felt like a level that could have hit 19 percent by the industrial base did not materialize,” he commented.
Still, even with SARS and other world problems, the SIA says chip consumption will continue its migration from the Americas to Asia Pacific, in part because of the outsourcing of electronic equipment manufacturing but also because of component sourcing and design services to the region.
The three-year forecast based on analysis from IDC and other groups also marks the first time that chip sales in the Americas will dip to fourth place ($30.6 billion in 2003) just behind Europe’s predicted $31.1 billion in sales this year. Japan continues its second-place reign at just over $45 billion in 2003, while Asia hopes to see $57.3 billion in 2003 sales growing to $81.8 billion in 2006.
Big Winners and Bigger Winners
In addition to the usual suspects of wireless and other mobile devices, one bright spot for chips has been in the telematics marketplace. SIA stats show steady growth in the next three years based mostly on embedded GPS, but also microcontrollers that regulate a car’s system. DSPs, for example, which can be found in wired and wireless communications applications, along with consumer, computer and automotive is forecast to rise 27.7 percent to $6.2 billion in 2003 and $9.6 billion in 2006.
On a case-by-case scenario, The MOS Memory market, which includes DRAMs, Flash, SRAMs, and EPROMs, is expected to continue in its historical volatile patterns.
The SIA says no one segment more clearly demonstrates the cyclical nature of the global semiconductor market than DRAMs. While the chips were once used almost entirely in computers, they are now found in a broad number of consumer and communication applications. The SIA says the DRAM market is expected to grow 2.9 percent to $15.7 billion in 2003 and 43 percent to $22.5 billion in 2004. In 2005, DRAMs are expected to decrease 26.8 percent to $16.4 billion. In 2006, the group says the market will rebound 29.6 percent to $21.3 billion in sales.
Flash memory is expected make great strides. In 2003, the SIA says the market is expected to grow 25.0 percent to $9.7 billion, grow an additional 25.0 percent to $12.1 billion in 2004, and another 11.0 percent to $13.5 billion in 2005. In 2006, however, Flash, which is found in communications and digital photography applications, is expected to decline 5.0 percent to $12.8 billion in sales due to the cyclical nature of this sector.
The remainder of the field is a mixed bag with Discrete components ranging in sales from a growth of 7.3 percent to $13.2 billion in 2003 to 3.3 percent to $16.8 billion in 2006.
Optoelectronics, which find themselves in laser devices, image sensors, and products that are frequently used in communication applications are expected to hit $8.3 billion in sales in 2003 and then increase 5.6 percent to $11.2 billion in 2006. Consumer and automotive application-specific analog products are anticipated to reach the $35.1 billion mark by 2006. MOS Logic is expected to grow to $45.2 billion by 2006. MOS Micro Devices could see sales of $55.8 billion in the next three years.
By the end of the year, the SIA says microprocessors will increase 8.1 percent to $25.8 billion and then are forecast to grow 11.1 percent to $28.6 billion in 2004, 7.0 percent to $30.7 billion in 2005, and 4.0 percent to $31.9 billion in 2006.
The global microcontroller market, driven by consumer and automotive applications, is expected to increase 9.9 percent to $10.3 billion in 2003, and then grow 14.0 percent to $11.7 billion in 2004, 3.2 percent to $12.1 billion in 2005, and 18.5 percent to $14.3 billion by 2006.
