Cautious Optimism About Chip Market Growth
In-Stat/MDR, Scottsdale, Ariz., www.instat.com -- Semiconductor International, 6/1/2003
Although the semiconductor industry experienced four consecutive quarters of revenue growth in 2002, it is too soon to consider the industry recovered. The year 2002 ended with revenue 1.3% above the 2001 total. However, were it not for a major assist from DRAM (which increased revenue by 36.2% because of a rebound in average selling price [ASP]), the year would have ended off by 1.8%.
An upturn is expected, though, in the second half of 2003 that will result in annual worldwide semiconductor revenue growing by 16.7% to $164.2B. This will be followed by further growth in 2004 and 2005, before the next cyclical downturn occurs in 2006.
It is necessary to be cautious, as the outlook for the balance of this year is more uncertain than usual. First there are the usual problems associated with the recovery from a downturn, and the recent downturn was much more severe than most others, particularly in the information technology areas. In addition, with current geopolitical uncertainties, other factors that would normally figure prominently in the outlook (the continued strength of the Chinese economy, for example) have been reduced to a secondary status.
In-Stat/MDR has also found that:
- In the semiconductor industry itself, overcapacity remains a problem. After three consecutive quarters of improvement, wafer fab utilization went flat in third quarter 2002 and dropped to 81.5% in the fourth quarter.
- 2004 and most of 2005 are expected to be growth periods, with the growth interrupted late in 2005 when capacity is expected to pull ahead of demand, lowering ASPs and resulting in a 10.6% revenue decline in 2006.
- Asia-Pacific was the only region to experience revenue growth in 2002. For the Americas, Europe and Japan, 2002 was the second consecutive down year. The Americas have fared the worst with two consecutive years of double-digit declines. A large part of this drop has been due to the wireline networking segment.
This Market Alert is drawn from the In-Stat/MDR report, "Semiconductor Market Forecast," which looks at the overall economy, some specific semiconductor markets, and the industry's capacity situation. It then forecasts revenue, unit shipments and ASPs for the top-level product categories — Discrete, Optical and Sensor, Digital Bipolar, Analog, MOS Micro, MOS Logic and MOS Memory — over the 2003-2007 period.
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