SIA: Global chip sales to grow at 7.7% CAGR to reach $321B in 2010

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 11/14/2007

During the Semiconductor Industry Association’s (SIA) webcast this morning, hosted by EDN sister publication Semiconductor International, of the industry group's annual forecast of global semiconductor sales, the SIA is projecting that sales of chips will exceed $321 billion in 2010, growing at a compound annual growth rate (CAGR) of 7.7 percent between 2007 and 2010.

The SIA projects global sales of $257.1 billion this year, up 3.8 percent over last year’s sales of $247.7 billion. Next year, the SIA believes sales will reach $276.9 billion, a sequential increase of 7.7 percent; $296.2 billion in 2009, a sequential increase of 7.0 percent; and $321.5 billion in 2009, a sequential increase of 8.5 percent.

At the same time, market researchers at Gartner are warning of a downturn for the semiconductor industry
next year, due to sub-prime mortgage debt and the U.S.-initiated, and now global, "credit crunch.”

George Scalise, president of the SIA reminded during the webcast that consumer demand for electronic products continues to fuel strong demand for microchips and that this year, the worldwide microchip industry will produce 900 million transistors for every man, woman, and child on earth. "The increasing proliferation of semiconductors into an ever-broader range of consumer products coupled with the emergence of large new consumer markets in Asia, Eastern Europe, and South America will be the principal drivers of industry growth for the next several years,” he said.

Consumer purchases continued to drive industry growth in 2007 despite rising energy costs and other concerns and unit sales of PC, cell phone handsets, MP3 players, and digital TVs were very robust as well this year.

Sales of PCs, the largest single market for microchips, are now expected to show 11 to 12 percent growth this year, with handset unit shipments forecasted to grow by 12 percent. MP3 and PMP unit sales are forecasted to grow by 20 percent, and digital TV units by 50 percent, the SIA said.

“PCs, cell phones, MP3 players, and digital TVs all have high silicon content, thanks to progress in semiconductor technology. Today a typical PC sells for less than 30 percent of the price of a comparable unit in 1995, but today’s model is 100 times more powerful. We can expect to see similar cost and performance improvements in other silicon-intensive consumer products in the years ahead,” Scalise noted.

On a geographic basis, the SIA projects growth in all regional markets through 2010, with the Asia-Pacific region continuing to be the fastest-growing market, growing from 48.4 percent this year to 51.1 percent in 2010.

In terms of the inventory situation that has plagued the industry this year, Scalise said the situation is under control and the industry is not reporting excess inventory that would hamper growth.

“All in all, we are looking at a period of solid growth with a number of product areas doing exceptionally well. But we are at the lower end of the growth range,” Scalise concluded.