Demand for chips grows
Experts raise 2004 predictions for semiconductor market
The chip industry appears to be going from strength to strength as more industry experts raise their predictions for 2004.
Market watcher iSuppli has predicted that worldwide semiconductor revenue will rise to $226.5bn in 2004, up by 24.4 per cent from $182bn in 2003.
The revised chip forecast for 2004 is significantly higher than April's forecast of 19.8 per cent.
ISuppli has claimed that growth will slow down in 2005 but will still manage a healthy 11.8 per cent rise to hit $253.3bn for the year. It then expects the chip market to be almost flat in 2006, with just 0.1 per cent growth nudging revenues to $253.4bn.
A new growth cycle will start in 2007, when sales will jump by 9.2 per cent, and a further 10.4 per cent is expected in 2008.
The news comes on the back of recent findings by the Semiconductor Industry Association, which raised its 2004 growth forecast to 28.6 per cent, with a compound annual growth rate of 10.4 per cent predicted through 2007.
ISuppli also claimed that all major electronic equipment application markets will experience growth in 2004, driving broad semiconductor demand for the first time since 1999.
Businesses and consumers are shopping again, particularly for PCs (mainly notebooks), consumer electronics, wired and wireless telecommunications infrastructure and mobile phones.
"All application markets for semiconductors are back in positive territory in 2004, and all the regions will experience growth this year," said Gary Grandbois, principal analyst, linear and power management at iSuppli.
"Compared with 2000, this cycle is much more moderate and much more balanced. In the future, we'll look back at 2004 and say, 'They were the good old days.'"
The other barometer for the state of the chip market comes from Semiconductor Equipment and Materials International (Semi), which monitors the amount of chip equipment being bought.
In May, orders worth $1.58bn were placed with a book-to-bill ratio of 1.11 (meaning that $111 worth of orders were received for every $100 of product billed for the month).
"Billings for semiconductor manufacturing equipment have increased sequentially in each of the past 11 months and are at their highest levels since May 2001," said Stanley Myers, chief executive of Semi.
"Sales in the first five months of 2004 are more than 50 per cent higher than those in the first five months of 2003. The apparent stabilisation of bookings and billings at these high levels indicates that 2004 will be a strong year for the semiconductor capital equipment market."