Chip market will boom again in 2001: SIA

Driven by strong demand for communications and consumer electronics products,

global 2000 chip sales are expected to grow 37 per cent to $205 billion. Just

five months ago, the SIA had forecast a 31 per cent growth to $37 billion.

Next year, sales will reach $249 billion. By 2003, global chip sales are

expected to reach $319 billion, the SIA forecasted. "Demand remains robust

for chips used in the Internet and in telecommunications and consumer

products,'' said SIA president George Scalise.

The latest SIA forecast shows that chips for data networking, broadband,

wireless, opto-electronics as well as personal computers will spur the gains.

"The PC is still a major growth driver, but for much of the industry there

are faster growth opportunities associated with the new information-based

economy," said Wilfred Corrigan, chief executive of chipmaker LSI Logic who

presented the SIA forecast at the group's annual forecast dinner in Santa Clara.

Intel CEO Craig Barrett added that sales of its networking, communications

and wireless chips were growing roughly 50 per cent or more a year, much faster

than sales of personal computer microprocessors, which are growing at about 10

per cent.

Corrigan said the market for ICs is broadening beyond personal computers, and

more geographic areas are consuming a larger piece of the IOC pie, trends that

will help moderate the volatile boom and bust business cycles that have

characterized the chip industry of the past 40 years.

Ten years ago, the two largest chip markets, the United States and Japan,

consumed 75 per cent of the world's ICs. Today, the two biggest markets–the

United States and Asia-Pacific–account for less than 60 per cent.

In the Americas, chip sales should rise 34 per cent this year to $64 billion

and 21 per cent next year to $77 billion. The European market will grow 33 per

cent this year to $42 billion and 21 per cent next year to $51 billion. Japanese

sales should increase 42 per cent this year to $46 billion and 22 per cent next

year to $56 billion. And in the Asia Pacific region, sales should gain nearly 41

per cent this year to $52 billion, 24 per cent next year to $65 billion.

• Product wise, DRAMs and general purpose microprocessors are not the fast
  
  growing sectors any longer.
• Flash memory chips, popular in cell phones, are forecast to more than
  
  double to $23 billion in 2003 from an estimated $10 billion this year.
• Digital signal processors, or DSPs, used in mobile phones, are forecast to
  
  more than double to $13 billion by 2003 from $6 billion this year. Texas
  
  Instruments Inc., Lucent Technologies Inc. and Motorola Inc. are among the
  
  biggest makers of DSPs.
• Logic devices, which include programmable logic ICs are forecast to rise
  
  to $56 billion during the next three years, from $34 billion this year.
• DRAMs, should see sales rise 68 per cent to $52 billion in 2003 from $31
  
  billion this year.
• Sales of Microprocessors are expected to rise 11 per cent this year to $30
  
  billion and to $38 billion in 2003.