I>"Champions know that success is inevitable; that there is no such thing as failure, only feedback. They know that the best way to forecast the future is to create it."
-- Michael J. Gelb (b. 1952), Writer, author
It almost goes without saying that 2004 was a huge growth year for the semiconductor industry. Led by memory products and logic, the overall market was up an estimated 28 percent over the previous year. There were gains seen in every semiconductor category, from optoelectronics and sensors to MOS Micro and the discretes. Analog ICs alone grew an estimated 17 percent with over $31 billion for the year.
All of the excitement seems to have passed. The semiconductor market needs to stabilize itself in 2005, by way of clearing the excess inventory built up from overspending. For this year, Databeans expects that the overall market will be flat, generating an estimated $212 billion in revenue, which would equal a -1 percent change from last year. That is assuming that this market will correct itself with a combination of sustained demand for computers and consumer electronics, and with reduced capital spending on the part of suppliers.
China continues to be a region of focus for the semiconductor industry, as it will in the next few years become the largest market in the world, generating more semiconductor revenue than any other country or region. For example, the US, Japan, and Europe bought more cell phones and computers from China, the country's exports rose 33 percent in December of 2004, increasing the trade surplus to its highest level ever.
The Chinese government would like the country to become an exporter of higher "value-added" goods such as technology products, while moving away from cheaper consumer goods and commodity textiles. It also wants to develop exports by its own domestic companies, rather than having to rely upon exports from foreign multinational corporations.
Looking ahead into next year, the semiconductor outlook is brighter, with growth expected across all segments. Databeans considers 2006 a return to growth year, with that growth to be sustained well into 2007.
Databeans, Inc., 7715 Harvest Hill Lane, Reno, NV 89523. phone 775.624.2881. www.databeans.net