Worldwide Sales of Chips on the Rise, Group Says

Worldwide sales of semiconductors, after their worst-ever slump in 2001, are on the rebound this year and will rise a modest 3.1% to $143 billion, a trade group said Wednesday.

After rising modestly this year, the Semiconductor Industry Assn., in its midyear forecast for the industry, predicts global sales of semiconductors will rise 23.2% to $177 billion in 2003 and 20.9% to $213 billion in 2004. Muted growth of 0.9%, to $215 billion, is expected to follow in 2005, it added.

“So far this year, we have seen a significant decline in excess inventory and manufacturing capacity, and the industry has resumed modest sequential growth, indicating that we are in the initial stages of a recovery,” said Dwight Decker, chairman and chief executive of chip maker Conexant Systems Inc.

Increasing sales of cellular handsets, personal computers and of digital consumer electronics devices during the next 10 quarters will lead the rebound, Decker said.

The chip industry suffered last year as economies slowed, companies cut back on information technology spending and chip companies overbuilt inventories based on overly optimistic assumptions of growth, particularly in the telecommunications industry.

Rapid growth in the Asia Pacific region will help to fuel growth in the notoriously boom-and-bust industry, which suffered its worst-ever year in 2001, when global chip sales plunged some 34%, twice the previous-worst percentage decline in 1985.

During the next four years, the Asia Pacific market will become the world’s largest in terms of chip sales, followed by the Americas, the SIA said. That region has already been the top revenue generator for Intel Corp.