The Semiconductor Industry Association (SIA) has released its midyear forecast projecting an industry-wide recovery in the second half of this year that will spur growth of 20.5% in 2002 and 25% in 2003.
‘Despite the sales decline brought on by the excess inventory this year, the semiconductor market is still projected to grow from $149 billion dollars in 1999 to $283 billion by 2004, a compound annual growth rate of almost 14%,’ said Kirk Pond, Fairchild Semiconductor president, CEO and chairman of the board. ‘The industry has a 17% compound annual growth rate for the past 40 years and we expect that to continue for the foreseeable future despite periodic cycles.’
In the mid-1980’s, the semiconductor industry experienced a similar cycle of extremely strong growth with an inventory correction in the following year. However, the 16.5 percent adjustment in 1985 was more severe than the 14% we are currently experiencing.
Pond, a 33-year semiconductor industry veteran who delivered the midyear forecast for the SIA, said it’s important to note that the industry can now react faster to changing market conditions because of instantaneous communications and better market intelligence. ‘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,’ Pond said.
The America’s market will remain the world’s largest in sales revenue during the next four years with the Asia Pacific, or non-Japan markets, closing-in. The Japanese market will be right behind Asia Pacific, which has gained momentum over the last couple of years, and the European market will be close behind.
Americas Market: The Americas will decrease 22 percent to $50 billion in 2001, and then grow 20 percent to $60 billion in 2002, 25 percent to $75 billion in 2003, and 2 percent to $76 billion in 2004.
European Market: This region will decline 6.0 percent in 2001 to $40 billion, and then grow 20 percent to $48 billion in 2002, 26 percent to $60 billion in 2003, and 8 percent to $65 billion in 2004.
Japanese Market: The Japanese market will decrease 9 percent to $43 billion in 2001, increase to 19 percent to $51 billion in 2002, 23 percent to $62 billion in 2003, and 9 percent to $68 billion in 2004.
Asia Pacific Market: This region is currently forecasted to decline in sales 16 percent to $43 billion in 2001, and then is expected to resume as one of the fastest growing regions with growth at 23 percent to $53 billion in 2002, 27 percent to $68 billion in 2003, and 9 percent to $74 billion in 2004.
Other highlights of the SIA 2001-2004 forecast:
Total Semiconductors: The total semiconductor market is expected to experience a decrease in sales in 2001 of 14 percent to $175 billion. However in 2002, the SIA forecasts growth of 21 percent to $211 billion, 25 percent to $265 billion in 2003, and 7 percent to $283 billion in 2004.
Discrete Components: Discrete components include Radio Frequency (RF) and Power Management devices both found in wireless consumer products. They comprise nearly 9 percent of the global market, and in 2001, will decline 10 percent to $15 billion. Then, however, discretes are forecasted to grow 19 percent to $18 billion in 2002, 25 percent to $23 billion in 2003, and 10 percent to $25 billion in 2004.
Optoelectronics: In 2001, this market is expected to decline 1 percent to $10 billion in 2001, but then grow 16 percent to $11 billion in 2002, 20 percent to $13 billion in 2003, and 18 percent to $16 billion in 2004. The optoelectronics market includes laser devices, image sensors, and products that are frequently used in communication applications.
Analog: Analog, which makes up 15 percent of the global market, will experience a decline of 12 percent to $27 billion in 2001. In 2002, however, it is expected to grow 25 percent to $34 billion, 31 percent to $44 billion in 2003, and 21 percent to $54 billion by 2004. The largest end-use driver of analog is the shift to upgraded telecommunications networks, to service the Internet, and digital telecom technologies. Consumer and automotive Application specific analog products also play an important role for this sector.
MOS Logic: The global logic market includes standard cell, Field Programmable Logic Devices (FPLD), and a broad variety of application specific products. For 2001, MOS Logic is forecasted to decline 13 percent to $30 billion. In 2002, growth of 17 percent to $35 billion is forecasted, in addition to 22 percent to $43 billion in 2003, and 16 percent to $50 billion in 2004.
MOS Micro Devices: This product category includes microprocessors, microcontrollers and microperipherals. In 2001, this product sector is expected to experience a decline of 15 percent to $52 billion. However, it is forecasted for growth of 16 percent to $60 billion in 2002, 20 percent to $72 billion in 2003, and 12 percent to $81 billion in 2004.
Microprocessors: Growth in this sector continues to align with the PC market, however, embedded applications may stimulate this sector in the future. Microprocessors will decline 14 percent to $27 billion in 2001, and then grow 11 percent to $31 billion in 2002, 14 percent to $35 billion in 2003, and 8 percent to $38 billion in 2004.
Microcontroller: The global microcontroller market, like many other product sectors, will experience a decline in 2001 before it sees growth again. It is forecasted that this sector will decrease 4 percent to $12 billion in 2001, and then have solid growth of 21 percent to $14 billion in 2002, 28 percent to $18 billion in 2003, and 16 percent to $21 billion by 2004.
Digital Signal Processors: DSPs continue to be one of the industry’s fastest growing major product lines. While in 2001 this market is forecasted to decrease in sales 26 percent to $5 billion, it is expected to resume growth in 2002 at 30 percent to $6 billion, 35 percent to $8 billion in 2003, and another 30 percent to $10 billion in 2004.
MOS Memory: The MOS market which includes DRAMs, SRAMs, EPROMs and Flash will continue to exhibit its’ historical volatility in the coming years. In 2001, the MOS Memory market is forecasted to decline 19 percent to $40 billion, but then grow 29 percent to $51 billion in 2002, and 31 percent to $67 billion in 2003. By 2004, this market is expected to incur a cyclical downturn with a decrease of 17 percent to $56 billion in sales.
DRAM: No one segment so clearly demonstrates the volatility and cyclicality of the global semiconductor market than DRAMs. The DRAM market is expected to decline 29 percent to $21 billion in 2001, grow 29 percent to $27 billion in 2002, grow 44 percent to $38 billion in 2003, and then significantly decrease in sales 33 percent, closing 2004 at $26 billion in sales.
Flash: The Flash market is expected to continue to experience a decrease in sales in 2001, but unlike other memory products, Flash will see growth through 2004. Flash products can be found in telecommunications and wireless products. In 2001, this market is expected to decline 3 percent to $10 billion, and then grow 35 percent to $14 billion in 2002, 25 percent to $17 billion in 2003, and continue to grow in 2004 at 15 percent to $20 billion in sales.