The global chip market is less likely to suffer major shortages or declines in the future, according to analyst iSuppli.
The analyst claimed that improved inventory practices, better management of manufacturing capacity and greater flexibility in memory production are combining to moderate ‘boom-bust’ cycles in the semiconductor industry.
It also said that the 34 per cent decline in 2001 was exacerbated by inflated sales in 2000, which were hit by the economic downturn in 2001.
“When I started in this industry 20 years ago, it was fashionable to say that cycles were dead and that the industry had reached a state of maturity, where we would no longer suffer cycles,” said Dale Ford, vice-president of market intelligence at iSuppli.
“Of course, this has been proved wrong year after year. However, the semiconductor industry still has cycles, but they are not the same cycles it had 10 years ago.”
Ford predicted that global semiconductor industry revenue growth will drop to 6.1 per cent in 2005 and by 2.5 per cent in 2006. It will then rise to 10.4 per cent in 2007 and by 11.6 per cent in 2008.
However, Les Billing, managing director of integrator Microtronica, said the market will always fluctuate.
“There will always be areas of shortage and oversupply in the chip market. It may not be on a global scale anymore, thanks to all the production capacity online now, but there are technology shifts and transitions from ‘old to new’ that simply cannot be predicted,” he said.
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