Chip industry predicts 2004 resurgence

Semiconductur upturn set to continue

The third-quarter upturn in revenue reported by semiconductor companies over the past few weeks will continue for the rest of the year and into 2004, according to the Semiconductor Industry Association (SIA) and In-Stat/MDR.

The SIA predicted revenue will increase by 15.8% in 2003 to $163 billion, and by 19.4% in 2004 to $194.6 billion in a press release Wednesday. In a separate release, market research firm In-Stat/MDR said 2003 revenue will grow 16.7% to $164.2 billion, and predicted 2004 revenue will reach $206.8 billion, a 26% increase.

Flash memory, optoelectronics, and digital signal processors (DSPs) will pace the overall market's growth for the remainder of this year and into next year, the SIA said. Shipments of cell phones, which use both flash memory and DSPs, are growing strongly, and that momentum will bring in more revenue to vendors of chips for those products, the trade group said.

Optoelectronics components are used in lasers, sensors, and networking equipment. Revenue from those components will grow 34.7%  this year, and 19.2% next year, the SIA said.

Both Intel nd Advanced Micro Devices reported sharp increases in revenue when they announced their third-quarter results last month. That trend extends to the rest of the industry, with revenue from microprocessor sales forecast to increase 14.4% to $27.3 billion in 2003, and to grow 18.3% to $32.3 billion in 2004, the SIA said. In 2002, Intel's microprocessor business alone accounted for $22.3 billion in revenue.

This recovery from one of the worst downturns in the history of the industry has been driven by a wider range of semiconductor products, and is therefore less susceptible to slowdowns in any one category, such as PCs, than prior recoveries, In-Stat said.

Tom Krazit writes for IDG News Service

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