Global chip sales to rise 16 pct in 2003-forecast
Wednesday November 5, 8:04 pm ET
By Elinor Mills Abreu
(Adds SIA conference call comment, quotes. context)
SAN FRANCISCO, Nov 5 (Reuters) - Global semiconductor sales are set to rise nearly 16 percent this year in an accelerating recovery led by demand in Japan and the rest of Asia, and powered by sales of chips used in communications, a trade group forecast on Wednesday.
ADVERTISEMENT
The San Jose, California-based Semiconductor Industry Association raised its 2003 sales forecast to growth of 15.8 percent from its prior forecast of 10.1 percent. The forecast for broad-based growth was based on sales data for the first nine months of the year.
The stronger forecast was the latest positive news for the beleaguered technology sector, which has lately seen an upswing in stock prices as company outlooks began to brighten. Tech stocks staged a late-day rally on Wednesday as investors scooped up seemingly low-priced stocks, nudging the tech-packed Nasdaq up into positive territory.
For 2004, semiconductor sales were projected to grow 19.4 percent, up from the the trade group's previous forecast of 16.8 percent growth.
That demand is being driven by stronger shipments of everything from cell phones and personal computers to server computers used to run corporate networks, the trade group said.
PC shipments are expected to increase 8 percent this year and 11 percent next year, while cell phone shipments are forecast to grow 10 percent this year and stay about the same next year, Doug Andrey, SIA director of finance, said on a conference call.
Next year, meanwhile, shipments of server computers were projected to grow about 15 percent, as corporate spending on information technology recovers, he said.
But even assuming that chip sales rebound this year and next by the strong margins projected, sales will stand at $194.6 billion, below the $204 billion at the peak in 2000.
A year ago, the SIA had optimistically forecast that sales would increase 20 percent for 2003, but the war in Iraq and the spread of the SARS virus in Asia earlier this year prompted it to lower its prediction as business was disrupted.
"It's been a rather unusual year," SIA President George Scalise said. "It wasn't until mid-year that we began to catch the wind.... The latter part of the year has been very, very strong."
The SIA forecast that growth in chip sales would slow in 2005 and 2006.
ASIA GROWING FASTEST, AMERICAS LAG
Asia continues to see the strongest regional growth, the trade group said.
Sales in Japan were forecast to grow 24.3 percent this year, followed by slower growth through 2006.
The forecast said the slowest growth would be in the Americas, at 1.9 percent, but added there would be a jump by a 17.7 percent next year.
The better demand for chips is also starting to put pressure on chip fabrication plants, raising the prospect of both stronger capital investment to relieve a capacity bottleneck and higher prices, the trade group said.
Semiconductor industry capital investment, forecast at 18 percent of sales this year, needs to be about 22 percent to sustain an equilibrium between supply and demand, said Andrey.
"The pricing power that is emerging at this stage is due to the capacity utilization moving into the mid-90 range," said Scalise. "We haven't had that for three years."
According to the SIA, the fastest-growing product segment this year -- at a projected 34.7 percent growth -- is expected to be optoelectronics, which includes laser devices, image sensors and other chips used in communications.
Digital signal processors, which convert sound, temperature and light into the digital language of computers are also in demand, the SIA said. Sales of such chips, widely used in cell phones and many other devices, are projected to grow 25.9 percent this year and 27.1 percent next year.
Sales of microprocessors -- the "brains" of a computer -- are forecast to grow 14.4 percent this year and 18.3 percent next year.
The chip industry has been in the doldrums since global sales plunged 32 percent in 2001 as corporate spending slowed and dot-com companies failed, dragging the overall economy down. Chip sales rose a mere 1.3 percent last year. |
