2002 marks the start of a chip recovery

Worldwide semiconductor revenue is projected to reach $147 billion in 2001, a 35 percent decrease from 2000, according to the latest forecast by Dataquest.

‘Continued deterioration in device average selling prices in the third quarter of 2001 means that even a significant improvement in demand in the fourth quarter, resulting in pricing stabilisation, will not be enough to prevent the industry’s revenue from declining 35 percent this year,’ said Richard Gordon, principal analyst for Gartner Dataquest’s worldwide semiconductor group.

Gartner Dataquest analysts point out that although this downturn may be the worst in the history of the semiconductor industry, a recovery is inevitable given the cyclical nature of investment in semiconductor capital equipment, and assuming that electronic equipment production has returned to more normal levels by 2003.

While 2002 is projected to be a recovery year, worldwide semiconductor revenue growth will be just 3 percent, with revenue forecast to be $152 billion.

By 2003, Gartner Dataquest expects the semiconductor industry to be in the midst of a full-blown growth cycle, with an annual growth rate of approximately 30 percent.

‘The slowdown in capital expenditure in 2001 will likely spill over into 2002, resulting in supply-side tightness in 2003, when a stronger demand side is expected to have returned to the market,’ Gordon said.

‘Improvements in the macroeconomic environment will likely fuel a PC replacement cycle and a recovery in the wired communications sector. In addition, the rollout of 2.5 generation and 3G cellular will be well under way in the 2003 time frame, boosting demand for silicon-rich handsets,’ he concluded.

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