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SIA: 2004 will be chip biz's best yet

Sales beat 2000's record

2004 will be the best year ever for chip revenues, according to the Semiconductor Industry Association (SIA) which last night issued a bullish forecast, revising figures upwards.

Europe-traded Intel and AMD stock rose on the news, with Intel up seven cents to $28.47 and AMD up eight cents to $15.59 in early trading in Germany this morning. Texas Instruments jumped ten cents to $25.32.

The SIA now believes global chip sales will total $214bn this year - almost five per cent up on the $204bn recorded in 2000, the previous record year. The projected revenues are 28.6 per cent up on 2003's figure of $166.4bn, which was 18 per cent higher than 2002's.

The new forecast is a big jump over the 19.4 per cent growth the SIA predicted six months ago for 2004. In May, the organisation began talking about raising that figure above 20 per cent; but to take it to almost 30 per cent comes as a surprise.

However, the broad trend remains the same: fast growth this year, a slower rate of expansion in 2005, followed by contraction in 2006 and revival the year after that.

According to the SIA, sales will hit $223bn in 2005, up 4.2 per cent; drop to $221bn in 2006, a decline of 0.8 per cent; and rally to $247bn in 2007, up 11.7 per cent. Together, those figures yield an average growth rate of 10.4 per cent through 2007.

Processor sales are unlikely to match that level of growth: the SIA reckons sales in this sector will see a compound annual growth rate (CAGR) of just 7.8 per cent, from $32.3bn in 2004 to $37bn in 2007. The winners will be optoelectronic, analog and DSP products, which will experience CAGRs of 15.5, 12.4 and 17 per cent, respectively.

DRAM sales are expected to grow 7.9 per cent through 2007, though they will experience a big jump this year: 55.8 per cent to $26bn.

The geographical spread of the market won't change much over the coming years. The SIA reckons Asia-Pacific will grow its market share slightly, from 40 per cent now to 43 per cent in 2007. Japan will remain static on 22 per cent, Europe at around 18 per cent, while the Americas will decline to 17 per cent. ®

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