The Semiconductor Industry Association (SIA) has issued its 2004-2007 midyear forecast, projecting stronger-than-expected growth of 28.6% for 2004 and a compound annual growth rate (CAGR) of 10.4% up to 2007.
The new SIA forecast projects worldwide sales of semiconductors will grow to $214 billion this year, surpassing the previous record sales of $204 billion in 2000. SIA projects that industry growth will slow to 4.2% in 2005 and that sales will decline by 0.8% in 2006 before rebounding to 11.7% growth in 2007, when industry revenues are projected to reach $250 billion.
“The industry is experiencing substantially stronger than expected growth in 2004 as a result of underlying strength in a broad range of end-use markets,” said SIA President George Scalise.
“We now expect that worldwide industry sales will surpass the previous record one year earlier than previously projected. For the longer term, we project a compound annual growth rate of 10.4% through 2007 when we expect that worldwide sales will reach a quarter of a trillion dollars. While this growth rate is lower than the historical growth rate of the past several decades, it represents very healthy growth for a $200-plus-billion industry,” he added.
Industry growth is being driven by strong demand for microchips for a broad range of applications, including personal computers, cellular telephones, consumer electronics, wired and wireless telecommunications infrastructure, and automotive.
Personal computer sales, which represent approximately 30% of the semiconductor market, are now forecast to grow by 13% in 2004 compared to an earlier forecast of 11% growth.
Unit sales of cellular phones are projected to grow by 15% in 2004. Newer cell phones also have a higher content of integrated circuits due to the increased sales of units with digital cameras, colour displays, and enhanced data capabilities.
Consumer electronics will continue to be a strong driver of semiconductor sales. The market for digital cameras is now larger than the market for traditional film cameras. This market is now forecasted to grow by 27% in 2004 compared to the earlier forecast of 14% growth. DVD players will grow by 10% – lower than the 30% growth forecasted, but on a larger-than-expected base following strong growth in 2003. Sales of digital video recorders (DVRs), however, are experiencing explosive growth – nearly triple the unit volume of 2003 – and DVRs have four times the semiconductor content of DVD players.
The continued expansion of broadband and the WiFi revolution employing sophisticated semiconductor technologies are projected to be important sources of growth going forward. Capital expenditures for telecommunications are now expected to grow in the 5-to-10% range in 2004 – the first increase since 2000.
The automotive market is expected to continue to grow as the semiconductor content per automobile is increasing by 10 percent each year.
“The current cycle appears to be one of the more balanced cycles in the history of the industry, with growth coming from a very broad range of applications and in all geographic regions,” Scalise concluded.
<b>Around The World</b>
The migration of the electronics equipment market to the Asia-Pacific region continues unabated. The region currently accounts for 40% of the global semiconductor market, and is expected to reach 43% by 2007.
Semiconductor sales in Asia-Pacific are projected to grow from $62.8 billion in 2003 to $106 billion in 2007, a compound annual growth rate of 14.0%.
The China semiconductor market is currently approximately 15% of the total worldwide market.
The market in Japan is projected to remain steady at approximately 22% of world semiconductor consumption through the forecast period. Sales in Japan are projected to grow from $38.9 billion in 2003 to $47.7 billion in 2004 and to $53.8 billion in 2007, a CAGR of 8.4%.
Europe now consumes approximately 20% of all semiconductors, and the forecast projects that this market share will continue as European electronics equipment manufacturers shift production to Eastern Europe rather than Asia. Semiconductor sales in Europe are projected to grow from $32.3 billion to 2003 to $45.9 billion in 2007, a CAGR of 9.2%.
The market for semiconductors in the Americas has been in decline, from 22% of the worldwide market in 2002 to 19% in 2003. This decline is projected to continue, falling to 17% by 2007 as electronics equipment manufacturing continues to shift to Asia. Sales in the Americas are projected to grow from $32.3 billion in 2003 to $41.5 billion in 2007, a CAGR of 6.5%.
Factory utilisation has improved steadily since reaching a low point of 63% of capacity in the third quarter of 2001. Factory utilisation increased to 93% of capacity in the first quarter of 2004, a rate that is near the peak of 2000. The utilisation rates for leading-edge capacity, defined as smaller than 0.16-micron technologies, and foundry utilisation are at 99% of capacity.
<b>Semiconductor Product Categories</b>
Discrete products are projected to grow by 20.2% to $16.0 billion in 2004 and to $17.6 billion in 2007, a CAGR of 7.2%. Discrete components include power transistors and radio frequency (RF) transistors that are found in wireless consumer products.
Optoelectronics device sales are projected to grow by 37.3% to $13.1 billion in 2004 and to $16.9 billion in 2007, a CAGR of 15.5%. Optoelectronics devices include image-sensors that are used in camera phone and digital still camera applications.
Analog devices are expected to grow by 28%in 2004 to $34.3 billion. This segment is projected to grow to $42.7 billion by 2007, a CAGR of 12.4 percent. Analog devices are used in communications, computer, consumer, automotive, and industrial applications.
Microprocessor sales are projected to grow by 17.7% to $32.3 billion in 2004 and to $37.0 billion in 2007, a CAGR of 7.8%. Microprocessors are the engine of the personal computer and in embedded control applications.
Microcontroller sales are projected to grow by 15.9% to $11.6 billion in 2004 and to $13.5 billion in 2007, a CAGR of 7.8%. Microcontrollers are used in a wide variety of end-use applications, including automotive and process control systems.
DSP sales are projected to grow by 31.0% to $8.0 billion in 2004 and to $11.6 billion in 2007, a CAGR of 17%. Digital signal processors are the engine of the wireless communication devices. The segment is the fastest-growing segment in the current forecast period.
MOS logic device sales are projected to grow by 23.0% to $45.4 billion in 2004 and to $53.1 billion in 2007, a CAGR of 9.5%. MOS logic includes standard logic, standard cell, field programmable logic devices, and a broad range of application-specific products.
DRAM sales are projected to grow by 55.8% to $26.0 billion in 2004 before declining to $22.6 billion in 2007. The projected CAGR for the forecast period is 7.9%. The major application for DRAMs is in personal computers. DRAMs are also increasingly used in handsets.
Flash memory sales are projected to grow by 48.9% to $17.5 billion in 2004 and to $20.5 billion in 2007, a CAGR of 15.1%. Flash memory devices are used in cell phones, digital still cameras, and a broad range of other applications.