Hitting new highs

According to iSuppli Corp, the semiconductor industry hit the ‘sweet spot’ in 2004, with supply and demand aligning to generate strong growth.

The semiconductor industry has hit the sweet spot in 2004, with supply and demand forces aligning to generate strong growth, but not the kind of overheated expansion that led to the severe market downturn in 2001, iSuppli Corp believes.

Worldwide semiconductor revenue will rise to $226.5 billion in 2004, up 24.4 percent from $182 billion in 2003, according to iSuppli’s newly revised forecast. iSuppli’s previous forecast, released in April, predicted 19.8 percent semiconductor growth in 2004.

Market growth will slow in 2005, but still will manage a respectable 11.8 percent rise to reach $253.3 billion for the year. The chip market will be virtually flat in 2006, with growth of 0.1 percent to reach $253.4 billion.

A new growth cycle will commence in 2007, when sales will rise 9.2 percent to reach $276.6 billion. Chip revenue will increase another 10.4 percent in 2008 to hit $305.4 billion.

“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 for iSuppli.

“Compared to 2000, this cycle is much more moderate and much more balanced. In the future, we’ll look back at 2004 and say, ‘Those were the good old days.'”

On the demand side, iSuppli predicts all major electronic equipment application markets will experience growth in 2004, driving broad semiconductor demand. This is the first time this has occurred since 1999.

With the long-suffering wireless communications area finally returning to growth in 2004, overall electronic equipment revenue will reach $1.16 trillion in 2004, up 10 percent from $1.06 trillion in 2003, iSuppli predicts.

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