SIA Predicts Boost in Chip Sales, Calls for Nano Research

"Underlying strength in a broad range of end-use markets" is fueling the industry's growth in 2004, the Semiconductor Industry Association says, adding that a national center for nanoelectronics research should be formed to keep the industry o

The chip industrys trade association said Thursday that it expects sales of semiconductors to finally recover from the dot-com bust. But the group advised that the formation of a national center for nanoelectronics research is necessary to keep the industry on its growth path.

The Semiconductor Industry Association (SIA) said it expects 2004 chip sales to grow 28.6 percent, to $214 billion, topping the $204 billion the industry recorded at the height of the dot-com boom in 2000.

But the agency also reiterated that chip sales are expected to grow only 4.2 percent in 2005 to $223 billion and actually decline by 0.8 percent in 2006 to $221 billion—the bottom of the next downturn.

/zimages/5/28571.gifClick here to read more about analysts prediction of a mild recession for semiconductors in 2005.

The chip industry has slowly recovered from the steep drop in sales that occurred in 2001 and 2002, when the dot-com industry stumbled and sales of servers and other complementary hardware slowed as well.

The SIA said the chip industrys recovery will arrive a year earlier than expected. Companies such as Intel Corp., meanwhile, have reported record revenues as they have led the recovery.

"The industry is experiencing substantially stronger-than-expected growth in 2004 as a result of underlying strength in a broad range of end-use markets," SIA president George Scalise said in a statement.

"We now expect that worldwide industry sales will surpass the previous record one year earlier than previously projected. For the longer term, we project a compound annual growth rate of 10.4 percent through 2007, when we expect that worldwide sales will reach a quarter of a trillion dollars," Scalise said.

"While this growth rate is lower than the historical growth rate of the past several decades, it represents very healthy growth for a $200-plus-billion industry."

Next Page: One linchpin is the amount of manufacturing capability being used.