Chip industry revenue to grow less than 10% in 2005
Staff -- Purchasing, 10/21/2004 2:00:00 AM
The worldwide semiconductor market will grow 9.6% to $250 billion in 2005, according to researcher iSuppli.
Global semiconductor sales grew by 31.4% in the first half of 2004 compared to the first half of 2003, but second-half semiconductor sales will slow to a 20% growth rate compared to the same period in 2003. For 2003, chip revenue will rise 24.4% to $228.3 billion.
With sales growth easing at the end of 2004, semiconductor revenue in the first half of 2005 will rise by less than 2% compared to the second half of 2004. The second half of 2005 will generate more growth with chip sales rising 6% compared to the first half.
However, the increase in the second half of 2005 will not spur a strong recovery in the semiconductor industry. A DRAM revenue downturn in 2006 will limit total semiconductor growth to only 2% that year.
Weak prices and slowing demand for equipment will cause the decline in semiconductor revenue growth. Revenue growth in the electronic equipment market will weaken to 5.8% in 2005, down from 9.8% in 2004.
Mobile-phone unit shipment growth, which grew 20% in 2003 and 19% in 2004 will slow to only 5% in 2005. Meanwhile, notebook PC unit shipment growth will drop to 10% in 2005, from 20.1% in 2004.
The good news for buyers is that prices will drop in 2005. Chip prices have held steady for the most part in 2004 because there has been a balance between supply and demand. But with equipment demand weakening, demand for semiconductors and tags will fall.
DRAM revenues will be particularly weakened by the price erosion, but sales revenue for DRAM will still rise by about 8.6% in 2005, according to iSuppli.
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