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Analysts see over 30% chip growth for 2010

Posted: 11 May 2010 ?? ?Print Version ?Bookmark and Share

Keywords:IC forecast? Q1 results? semiconductor market?

After seeing better-than-expected numbers from Q1, three market research analysts updated their forecasts for the 2010 semiconductor market.

Dale Ford of iSuppli Corp., Malcom Penn of Future Horizons Ltd and independent analyst Mike Cowan are now all predicting 2010 chip growth north of 30 percent following the revisions. It would mark the first time the chip market grew by more than 30 percent in a year since 2000, when the dot com boom drove a spike in demand and the market expanded more than 36 percent.

Dozens of firms in the semiconductor and related industries reported better-than-expected first quarter financials that compared favorably to what was a weak Q1 09. The semiconductor market earnings season was overall the strongest it has been in years.

The Semiconductor Industry Association (SIA) trade group reported earlier this week that the three-month average of global sales of semiconductors for March set a record high for the month of $23.06 billion, close to an all-time high for any month.

Ford noted in a statement issued by iSuppli Corp. that Q1 chip sales were up 1.1 percent compared to Q4 09, even though semiconductor revenue typically declines in the first quarter compared with the fourth quarter of the previous year.

"This is the first time the industry has achieved sequential growth in the first quarter since 2004, and it represents the strongest growth during the period since 2002, when revenue grew by 5.4 percent," Ford said through a statement.

iSuppli predicted that the chip market will grow 31 percent in 2010, reaching a record $300.3 billion. ISuppli had previously said it expected 2010 chip sales to be up 21.5 percent compared with 2009.

Unlike the Internet-crazed 2000 spike, the 2010 market growth will be driven by fundamental supply and demand factors that slowly have been gaining momentum during the past 12 months, according to Ford.

But Ford also cautioned that the projected 2010 growth is large only because it compares with the down year of 2009. Projected 2010 growth is only about 15 percent above the 2008 market, Ford said.

Speaking at the Future Horizons International Electronics Forum in Dresden, Germany, Penn raised his forecast for the growth of global chip revenue in 2010 to 31 percent, up from an earlier prediction of 22 percent. The change was made on the strength of the Q1 financial results reported by chip companies and his perception of continued strength in Q2, Penn said.

Penn, who also projects another 28 percent growth in 2011 and 12 percent growth in 2012, berated the chip industry for having lost its appetite for risk and said that too many executives refused to believe good news that was apparent in the numbers coming from the SIA.

Cowan, who uses a linear regression analysis model, is now predicting 30.3 percent chip industry growth following the SIA's report of strong Q1 chip sales. Cowan predicts Q2 semiconductor sales of $70.76 billion, Q3 sales of $77.89 billion and a slight drop in Q4 to $77.24 billion.

- Peter Clarke, Dylan McGrath
EE Times

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