Chip Sales Set to Climb

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The worldwide semiconductor market will grow 18 percent in 2004 on strong growth in sales of mobile phones and PCs, according to research firm IDC.

Semiconductor revenue in 2003 reached $160 billion, and after a very strong 2004 will settle down to a 12 percent compound annual growth rate until 2008, when the market will be worth $282 billion, the researcher says.

Strong demand for PCs and mobile phones in the second half of 2003 has helped to stabilize average selling prices for semiconductors, according to IDC. Mobile phone shipments in 2003 reached 530 million units worldwide while PC shipments reached 152 million units, and unit shipments of both will grow more than 10 percent this year, IDC says.

Worldwide Growth

China is becoming an increasingly important driver of the semiconductor market--it is the largest consumer of mobile phones and the second-largest consumer of PCs. The country now has its own semiconductor companies, which will affect the competitive landscape for original equipment manufacturers, original design manufacturers, and semiconductor suppliers over the next five years, IDC says.

Chinese semiconductor demand currently represents over one-quarter of the $60 billion total for the Asia-Pacific region and will account for almost half of the entire region by the end of 2008, IDC says.

Despite strong worldwide industry growth, there will be a shakeout in certain areas of the industry according to IDC.

Semiconductor design houses and fabless wired communication chip suppliers will be the most likely to consolidate, with flash memory, analog, and wireless semiconductor vendors also affected, IDC says.

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