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New Year Looks Good for Chip Industry
Nov 12, 2003
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The third-quarter upturn in revenue reported by semiconductor companies in recent weeks will continue for the rest of the year and into 2004, according to the Semiconductor Industry Association (SIA) and In-Stat/MDR.

The SIA predicts revenue will increase by 15.8 percent in 2003 to U.S.$163 billion, and by 19.4 percent in 2004 to U.S.$194.6 billion. Separately, market research firm In-Stat/MDR says 2003 revenue will grow 16.7 percent to U.S.$164.2 billion, and predicts 2004 revenue will reach U.S.$206.8 billion, a 26 percent increase.

Flash memory, optoelectronics, and digital signal processors (DSPs) will pace the overall market’s growth for the remainder of this year and into next year, the SIA says. Shipments of cell phones, which use both flash memory and DSPs, are growing strongly, and that momentum will bring in more revenue to vendors of chips for those products, the trade group says. The SIA’s previous report was also positive.

Optoelectronics components are used in lasers, sensors, and networking equipment. Revenue from those components will grow 34.7 percent this year and 19.2 percent next year, the SIA says.

Both Intel and Advanced Micro Devices reported sharp increases in revenue when they announced their third-quarter results in October. That trend extends to the rest of the industry, with revenue from microprocessor sales forecast to increase 14.4 percent to U.S.$27.3 billion in 2003, and to grow 18.3 percent to U.S.$32.3 billion in 2004, the SIA says. In 2002, Intel’s microprocessor business alone accounted for U.S.$22.3 billion in revenue.

This recovery from one of the worst downturns in the history of the industry has been driven by a wider range of semiconductor products, say In-Stat representatives. Therefore, it is less susceptible to slowdowns in any one category, such as PCs, than prior recoveries, the researchers say.

Chip manufacturers are gearing up for a recovery, pushing fab utilization rates up to 86 percent in the second quarter of 2003, and that rate is forecast to reach 90 percent in the near future, In-Stat says. During the worst point of the downturn in the third quarter of 2001, utilization rates fell to 64 percent, the company adds.

Asia-Pacific will continue its position as the fastest-growing region of the world in terms of revenue from semiconductors, according to the SIA. The plethora of chip foundries, motherboard manufacturers, and computer assemblers in the region will take in U.S.$60.6 billion in 2003, an increase of 18.6 percent from last year. The region, which excludes Japan, brings in more revenue from semiconductors than any other area of the world, the SIA says. (IDG News Service)

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