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   Date: 10th June 2010

Semiconductor industry sales forecast for 2010: SIA; 28.4%, Gartner; 27%

Semiconductor industry body Semiconductor Industry Association (SIA)'s latest forecast projects worldwide semiconductor chip sales to grow by 28.4 percent to reach a total revenue of $290.5 billion in 2010. SIA also forecasted a growth of 6.3 percent growth in 2011 to reach a revenue of $308.7 billion, followed by 2.9 percent growth in 2012 to $317.8 billion.

"Healthy demand in all major product sectors and in all geographic markets drove sales of semiconductors to record levels in the first four months of 2010," said SIA President George Scalise. "While the year-on-year growth rate will moderate through the remainder of the year, we expect modest sequential sales growth in line with historic seasonal patterns. The industry began the year with inventories in balance and we do not see evidence of excess inventory accumulation at this time."

"Economic forecasts project global economic growth rates of 4.6 percent in 2010 and 4.4 percent for 2011, with the fastest growth expected to be in emerging economies. These emerging markets - especially China and India - are creating demand for Information Technology products, which in turn fuels demand for semiconductors," Scalise concluded.

Market researcher Gartner has also forecasted nearly same figures. It has forecasted worldwide semiconductor revenue in 2010 to reach $290 billion in 2010, a 27.1 percent increase from 2009 revenue of $228 billion.

"Sequential semiconductor growth has been very strong over the last five quarters, well above seasonal norms, and manufacturing capacity is tight" said Bryan Lewis, research vice president at Gartner. "Chip revenue growth is clearly outpacing system revenue growth and that is a concern. Gartner's new semiconductor forecast has below-average growth in the second half of 2010 as we are anticipating a minor correction to realign semiconductor sales with electronic system sales. Even with this minor correction, we are still expecting very strong growth and record semiconductor sales in 2010."

In its latest release Gartner has raised production forecasts for PCs, mobile phones, automotive and select consumer products. Release states the PC and mobile phone markets will account for about 40 percent of the semiconductor market's growth in 2010. Gartner estimates 2010 PC processor revenue is expected to grow 15.5 percent.

According to Gartner, rising DRAM prices is causing the 2010 DRAM market to surge 78 percent, making it the strongest-performing semiconductor device market The demand for ultra portables such as such as Apple's iPad is impacting significantly on the semiconductor market.

Another market analyst iSuppli says growth in the first quarter of 2010 shows that the semiconductor industry is headed for a boom year in 2010. According to iSuppli global semiconductor revenue growth in first quarter rose by 2 percent compared to the fourth quarter.

Dale Ford, senior vice president, market intelligence services, for iSuppli said "Out of the more than 150 leading semiconductor suppliers tracked by iSuppli on a quarterly basis, only six saw their revenue decline in the first quarter of 2010 compared to the first quarter of 2009"

Semiconductor equipment growth is also another key indicator of demand for chips. Gartner forecasts worldwide semiconductor capital equipment spending is projected to surpass $35.4 billion in 2010, a 113.2 percent increase from 2009 spending of $16.6 billion, a big jump. So much sudden investment in semiconductor fabs will have some negative effect in 2011 and 2012.

"The drive to new technology nodes will drive semiconductor equipment growth in 2010," said Klaus Rinnen, managing vice president at Gartner. "The demand for 40-nanometer (nm) and 45 nm devices is now ramping up, resulting in heavy foundry-based capital spending. Investment at the 3x node by Intel, an increase in spending by NAND memory producers, and the transition to the next generation DDR3 DRAM memory are the key investment growth drivers."

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