No Slowdown for Rising Semiconductor Sales, IDC Says

After seeing chip sales decline in 2009, the semiconductor industry's fortunes are looking brighter in the coming years, according to IDC.

Worldwide chip sales slipped 9 percent in 2009, to US$225 billion, according to IDC estimates released in May. But demand is stronger now and chip sales are expected to grow at a compound annual rate of 8.8 percent through 2014, the research firm said Tuesday.

"Order rates are now normalizing after very exuberant rates in the fourth quarter of 2009 and the first quarter of 2010," IDC said.

Worldwide sales will hit $274 billion in 2010 -- an increase of 22 percent over the previous year -- and grow to $344 billion in 2014, the firm said. Much of that growth will come from growing demand for chips used in computers, with sales forecast to rise at a compound annual rate of 12 percent between now and 2014.

Sales of chips used in military, industrial and automotive applications will also grow in the coming years, with a projected compound annual growth rate of 13.2 percent, driven in part by demand for alternative energy sources.

However, not all segments of the semiconductor market will see sustained growth in coming years. Memory sales will rise 52 percent this year, before growth loses steam in coming years. "With technology transitions, increased price pressures, and more supply coming online, revenues for the memory market are expected to be flat or slightly decrease in 2011 and 2012," IDC said.

Sales of consumer chips will also grow at a slower pace. Sales will rise by nearly 6 percent year, but will grow at a lower rate over the next five years, it said.

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