Semiconductor Industry Set For Highest Annual Growth in 10 Years
Published on: 6th May 2010
Note -- this news article is more than a year old.
The last time the global semiconductor industry achieved annual revenue growth greater than 30 percent was when Bill Clinton was president, Gladiator was topping the box office and the Dot Com boom was so hot that the merger of AOL and Time Warner actually seemed like a good idea.
Now, 10 years after the chip business's whopping 36.7 percent expansion of 2000, the industry is expected to finally break the 30 percent barrier once again in 2010, with revenue set to rise to $300.3 billion, up 30.6 percent from $229.9 billion in 2009.
However, unlike the Internet-crazed spike in 2000, growth in chip sales this year will be driven by real fundamental supply/factors that slowly have been gaining momentum during the past 12 months.
"Building on the continuing expansion in sales that followed the downturn in late 2008 and early 2009, the semiconductor industry is set to achieve remarkable revenue growth and record size in 2010," said Dale Ford, senior vice president, market intelligence services, for iSuppli. "Chip sales growth this year will be fueled by a number of key factors, including continued strong consumer demand for hot electronic products, diligent inventory and capacity management efforts among chip makers and the arrival of innovative technologies at both the component and end-system levels."
This year will mark an all-time annual high for global semiconductor revenue, eclipsing the previous record of $274 billion set in 2007 by about 9 percent.
Ford noted that 2010 is bringing a return to normal semiconductor market conditions after the aberrant industry performance in 2009, when chip sales plunged due to external economic conditions.
"While the growth in 2010 is impressive, it still needs to be viewed in context of the dismal results in 2009," Ford noted. "Compared to 2008, the semiconductor industry in 2010 will achieve more moderate revenue growth of 15.4 percent."
The stage for strong annual growth in 2010 was set by unusually robust conditions in the first quarter.
"Semiconductor sales most commonly decline in the seasonally slow first quarter compared to the peak holiday period in the fourth quarter," Ford observed. "However, in 2010, first-quarter chip sales expanded by 1.1 percent compared to the fourth quarter of 2009. 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."
A major factor driving demand in the first quarter and beyond is consumer demand for electronic products, which continues to surpass expectations. Strong sales growth is predicted for 2010 in PCs, mobile handsets, LCD-TVs and other semiconductor-rich electronic systems. This will propel global factory revenue for electronic systems to a record high of $1.55 trillion in 2010, up 10.4 percent from $1.4 trillion in 2008. The previous high for electronic OEM revenue was $1.53 trillion in 2008.
Overall electronic equipment demand is being boosted by the health of the overall economy.
"The economy represents the biggest wild card in iSuppli's 2010 forecast," Ford warned. "While many indicators have shown sustained improvement, there are, however, a number of financial and economic trouble spots that could endanger the continued growth in the market before the end of 2010."
Beyond strong demand, semiconductor suppliers also are benefitting from careful management of chip inventories and tight controls on manufacturing capacity.
"By keeping a tight reign on stockpiles and production, semiconductor companies have been able to hold supplies at levels less than demand," Ford said. "As a result, many semiconductor product segments are experiencing strong upward price pressure."
Dramatic growth in DRAM revenues will be a major driver of growth in the overall semiconductor market. DRAM revenue growth in 2010 is projected to reach nearly 77 percent.
Other major growth drivers in 2010 will be NAND flash memory, analog Integrated Circuits (ICs), discretes, LEDs and Programmable Logic Devices (PLDs). All of these major market segments are forecasted to attain growth of more than 30 percent during the year. Most of the significant product segments are expected to expand by more than 20 percent.$page_length='long'; ?>