Semiconductors 'will lead recovery'

Recovery is expected for the semiconductor industry regardless of its latest poor performance.

Despite the doom and gloom surrounding the IT industry, the semiconductor sector expects to recover later this year.

Often the barometer of the health of the IT industry, figures from the Semiconductor Industry Association's (SIA's) mid-year forecast predict there will be an industry-wide recovery in the second half of the year, which will spur growth of 20.5 per cent in 2002 and 25 per cent in 2003.

The European market will not be unscathed in 2001, with a projected six per cent decline in sales to $40bn (£28bn).

However, sales in the region are expected to grow 20 per cent to $48bn next year, rise 26 per cent in 2003 to $60bn, and climb 8 per cent in 2004 to reach $65bn.

The Americas were looking at a drop of 22 per cent this year, to $50bn, which is predicted to rise 20 per cent to $60b in 2002. By 2004 it should be up to $76bn.

"Despite the sales decline brought on by the excess inventory this year, the semiconductor market is still projected to grow from $149bn to $283bn by 2004, a compound annual growth rate of almost 14 per cent," said Kirk Pond, chief executive of Fairchild Semiconductor, who delivered the SIA report.

Pond claimed that the industry is now better prepared to deal with changing market conditions than it was in the past.

"If you look at the downturn starting in 1996, the industry took 12 quarters before reducing capacity.

"In 2001, the industry took action with the first signs of the downturn and began reducing its capacity in only two quarters," he said.