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IC market growth tied to Asia-Pacific demand

Posted: 05 Mar 2004 ?? ?Print Version ?Bookmark and Share

Keywords:mobile phone? pc chips? idc? semiconductor?

The Asia-Pacific region will drive strong growth in mobile phone and PC chips this year, market-research firm IDC forecasts. Semiconductor demand from the region is about $60 billion. Over 25 percent of that is accounted for by mainland China, and the takeup is forecast to nearly double by 2008, says Mario Morales, VP of semiconductor research at IDC.

Mainland China is currently the world's largest consumer of mobile phones. It ranks second, after the United States, in PC consumption.

Japan is another giant market. It surpasses North and South America as the world's second-largest mobile-phone and PC consuming region.

Global mobile-phone production is projected to grow 11.3 percent this year to 512.3 million units from 460.2 million units last year. By next year, production will grow 1.2 percent to 518.2 million units, according to Gartner Inc., another market-research firm.

PC shipments are projected to grow 12.8 percent this year to 185.2 million units from 164.2 million units last year. By next year, PC shipments are projected to grow 9.5 percent to 202.8 million units, Gartner says.

Mainland China IC companies are also forecast to hugely benefit from the general industry trend toward outsourcing over the next five years due to their ability for low-cost production, the IDC report states.

The overall IC industry finished last year with lower-than-expected sales of $160 billion, a modest growth from the year-earlier $156 billion turnover. Gartner predicted semiconductor revenues of $173 billion for last year.

IDC has forecast IC revenues to climb at a compound annual growth rate of 12 percent through 2008, when revenues are expected to top $282 billion.

Growth in Asia stalled after the outbreak of the severe acute respiratory syndrome (SARS), prompting market researchers to lower their forecasts. The Semiconductor Industry Association slashed its forecast to 10.1 percent - down from an already downgraded 19.8 percent.

During a recent Industry Strategy Symposium in California, industry analysts predicted that the IC and chip equipment markets will show solid growth this year.

"The bottom line is that I'm pretty optimistic," says A. Michael Spence, professor emeritus of management in the graduate school of business at Stanford University. "We are in a period of rapid growth in the global economy."

Gartner forecasts a 20.1 percent IC industry growth in two expansion cycles. In the first phase, which is expected to last into the mid- or year-end, the industry will experience tight capacity, lean inventories and solid demand. By year-end through 2005, the IC market will experience another phase. "Continued end-user demand, improved demand visibility, and spot shortages will return to a more historical spending pattern," says Klaus-Dieter Rinnen, a Gartner analyst.

Another market researcher, IC Insights, expects the industry to grow by 27 percent this year to $210.5 billion.

Gartner, meanwhile, forecasts that the IC industry will grow 17.7 percent next year and falter in 2006, sliding by 4.2 percent. By 2007, the IC market is projected to rebound and grow by 7.6 percent.

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